Neutral Bajaj Finance; target of Rs 8300: Motilal Oswal

Motilal Oswal's research report on Bajaj Finance

Bajaj Finance (BAF)’s reported PAT grew 18% YoY to ~INR43.1b (~5% beat) in 3QFY25. NII grew 23% YoY to INR93.8b (in line). Other operating income at INR22.9b rose 39% YoY (6% beat), driven by improvement in fee income and income from the sale of services. BAF’s 3QFY25 NIM was steady QoQ at ~9.7%. The company sees a limited (~4-5bp) room for improvement in its CoF, irrespective of potential rate cuts in the current year. BAF aims to maintain stable margins as it enters the next fiscal year. However, any NIM compression can be mitigated by orchestrating its levers on fee income. We estimate NIM to remain largely range-bound at ~9.8-9.85% over FY26/FY27.

Outlook

Despite a healthy PAT CAGR of ~23% over FY24-FY27E and RoA/RoE of4.1%/21% in FY27E, we see limited upside catalysts. Consequently, we reiterateour Neutral rating with a TP of INR8,300 (premised on 4x Sep’26E BVPS).