'Buy' Bajaj Finance Shares Maintains HDFC Securities, Revises Target Price — Here's Why

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HDFC Securities Institutional Equities

Bajaj Finance Ltd.'sconsistent outperformance with an ever-expanding product portfolio has led it to scale up its assets under management from Rs 40 billion in FY10 to Rs 4,166 billion in FY25 (36% CAGR).

With a superior execution engine and management succession in place, Bajaj Finance aims to double its customer base and cross-sell franchise and reach an AUM of Rs 9-10 trillion by FY29, along with sustained RoE of 20-22%.

While FY25 profitability was impacted by higher than-expected credit costs, we believe Bajaj Finance is poised to continue delivering strong growth and profitability outcomes.

Near-term tailwinds such as improving operating efficiency, marginal reflation in NIMs, and moderation in credit costs are likely to drive reflation in RoA/RoE during FY26-FY27E.

However, strong outperformance in the past four quarters (33% vs 5% for Nifty 50) caps the upside from these levels.

We marginally tweak our estimates and maintain Buy with a revised RI-based target price of Rs 985 (implied 4.4x Mar-27 adjusted book value per share; 25x FY27 EPS).

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