Buy Bajaj Finance; target of Rs 10,500: Sharekhan

Sharekhan's research report on Bajaj Finance

Net earnings were in line although adjustment to ECL model led to a higher credit cost, which was offset by reversal of tax provisions and strong AUM growth. Management revised guidance for FY26 slightly on the lower side with respect to return ratios and AUM growth, citing focus on improving credit costs. We are building a 25% loan CAGR (versus >26% earlier), marginal improvement in NIMs, credit cost at 1.9-2.0% against it guidance of 1.85-1.95% and opex/assets at 2.8%/2.7% translating into RoA/RoE of >4%/>20%. Stock has outperformed Bank Nifty by 20%/17% on a YTD/12-month basis.

Outlook

We remain assertive for medium to long-term prospective. Hence, we retain a Buy with an unchanged PT of Rs. 10,500. At CMP, the stock trades at 4.6x/3.9x/ FY2026E/FY2027E BV estimates.

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