Brokerage firm Bernstein has reiterated its 'underperform' rating on Bajaj Finance Ltd., but raised its target price to Rs 840 from the earlier Rs 750. The upgrade reflects the brokerage's expectations that near‑term risks tied to elevated credit costs, a key concern for the non‑banking lender over the past few quarters, will ease. The stock is curretly trading at Rs 1,014.15 levels.
Bernstein noted that credit cost concerns have moderated significantly following Bajaj Finance's accelerated provisioning in the latest quarter.
The brokerage firm also highlighted an additional near‑term buffer to profitability in the form of potential gains from the sale of Bajaj Finance's stake in Bajaj Housing Finance. This is expected to support earnings as the company navigates a period of recalibration in its credit cost trajectory.
Reflecting the recent improvements, Bernstein has raised its Assets Under Management (AUM) growth assumptions for FY27 by nearly 2 percentage points and lowered credit cost estimates by about 20 bps for FY27–28, leading to the revised target price of Rs 840.
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However, despite improvement in near‑term indicators, the brokerage continues to flag long‑term structural concerns. These include sustained pricing pressure that has capped net interest margin expansion, steady yield compression despite a stable unsecured portfolio mix, and muted growth in assets under management per customer relative to the trajectory seen at banks.
Bernstein believes these factors could weigh on Bajaj Finance's steady‑state earnings potential and, consequently, its valuation over the medium to long term.
Out of 38 analysts tracking the company, 24 maintain a 'buy' rating while eight maintain a "hold" and six maintain a "sell" rating, according to Bloomberg data. The average 12-month consensus price target of Rs 1087.94 implies an upside of 7.6%.
Bajaj Finance's Q3 net profit fell by 6.3% to Rs 3,978 crore, compared to Rs 4,247 crore a year earlier. The company's calculated net interest income (NII) rose by 21% to Rs 11,318 crore. Bajaj Finance incurred a one-time cost of Rs 265 crore due to the implementation of the new labour codes. The gross non-performing assets (NPA) stood at 1.21% as of Dec 31. The net NPA level was reported at 0.47% as of Dec 3.
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