Bajaj Finance has got its target price upgraded by some brokerages after the company announced its December-quarter results, which were in line with analysts' expectations.
In the December quarter, Bajaj Finance Ltd.'s consolidated net profit rose 17% to Rs 4,246 crore, meeting analysts' estimates of Rs 4,200 crore. Higher net interest income lifted the bank's net profit, but it was capped by the rise in provisions and bad loans.
According to Jefferies, the asset quality trends are stabilising and the management expects credit costs to start tapering-off from 4Q. "This should abate concerns and aid earnings growth," it said, while maintaining a 'buy' rating. The NBFC is among its top picks and it has raised its target to Rs 9,270 from Rs 8,880 earlier.
Citi Research has also raised its target price to Rs 9,060 from Rs 8,150 earlier. It noted that credit cost at less than 2.2%, flat NIMs, 28% yoy/6.5% qoq AUM growth and higher non-interest income facilitated earnings beat.
"Augmenting collection capability, risk filters, delinquencies trending better in a few segments, and cutting volumes are giving confidence to guide for 2.00-2.05% credit cost in 4Q and less than 2% for FY26," it said. The brokerage has revised earnings by 1-2% over FY25-27E.
Emkay said, given Bajaj Finance's strong financials and sustained earnings growth above 20% and incorporating the Q3 developments and management insights, "we revise our FY25-27 estimates, leading to a 2.5% upward revision in earnings." The brokerage reiterated 'buy' on the stock, raising its target price by 5% to Rs 8,800.
According to Morgan Stanley, the visibility of over 25% EPS growth in FY26 has improved, subject to the macro climate - making Bajaj Finance an interesting quality large-cap. The stock is among Morgan Stanley's preferred overweights in a tough market. Its target price is Rs 9,300.
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