Bajaj Finance Ltd. was on brokerages' radar as the company reported a solid rise in net profit and interest income in the fourth quarter of the current financial year, even as asset quality soured. Consolidated profit rose 22% year-on-year to Rs 5,464.57 crore in the January-March quarter, as per results announced on Wednesday, compared to an estimate of Rs 5,511 crore.
Net interest income also jumped 20% to Rs 11,781 crore, against Rs 9,808 crore posted in the fourth quarter of fiscal 2025. Pre-provisioning operating profit increased by 21%. Asset quality worsened, with the share of gross non-performing loans rising to 1.01% from 0.96% in the previous quarter. Net NPA came in at 0.41% versus 0.44% in the March quarter. Loan losses and provisions decreased to Rs 2,008 crore from Rs 2,167 crore in the same quarter of financial year 2025.
Brokerages are turning more constructive on Bajaj Finance after its Q4 update, with several upgrades and target price hikes signalling improving confidence in the growth outlook. Citi upgraded the stock to “Buy,” highlighting that earlier headwinds have largely cleared. Morgan Stanley echoed the optimism, maintaining an “Overweight” rating and pointing to improving asset quality and stronger management commentary. Jefferies also retained its “Buy” stance, citing steady quarterly performance, improving credit quality, and a robust growth outlook.
That said, not all brokerages are convinced the optimism is fully priced in. Macquarie and Bernstein remain cautious, maintaining “Underperform” ratings amid concerns around valuations and sustainability of growth. Both flagged that while credit costs are easing and asset quality is improving, guidance for FY27—particularly around growth and return ratios — may be too aggressive.
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Citi on Bajaj Finance
- Citi upgrades the stock to Buy from Neutral and hikes the target price to Rs 1,120 from Rs 1,090.
- The brokerage believes key headwinds have cleared, with tailwinds from FinAI and credit trends building.
- Margins may see marginal compression, but fee income growth of 16–18% and operating efficiencies should offset this.
- Management guides for stable NIMs and healthy fee growth in FY27.
Morgan Stanley on Bajaj Finance
- Morgan Stanley maintains an Overweight rating and hikes the target price to Rs 1,120 from Rs 1,090.
- Q4 delivered good numbers with strong management commentary.
- The company enters FY27 with a favourable asset quality backdrop despite geopolitical uncertainties.
- This confidence could support a valuation re-rating.
- The brokerage expects ~4.6% RoA and EPS growth of 32% (headline) / 24% (adjusted) in FY27.
Jefferies on Bajaj Finance
- Jefferies maintains a Buy rating but cuts the target price to Rs 1,210 from Rs 1,270.
- Q4 was steady with a buoyant growth outlook.
- AUM grew 22%, supporting NII growth, while credit quality continued to improve.
- The company has built overlay provisions.
- Management expects 22–24% AUM growth, slightly lower NIMs and declining credit costs.
- Jefferies sees ~20% profit CAGR over FY26–29 and retains Bajaj Finance among its top picks.
Macquarie on Bajaj Finance
- Macquarie maintains an Underperform rating with a target price of Rs 860.
- Q4 PAT beat estimates due to lower credit costs.
- Focus now shifts to FY27, with concerns around sustainability.
- The brokerage sees downside risks, particularly around credit costs and growth assumptions.
- At 4.1x FY27E P/B, valuations appear expensive given the challenge of sustaining a 4.6% RoA at scale.
Bernstein on Bajaj Finance
- Bernstein maintains an Underperform rating with a target price of Rs 840.
- Lower credit costs helped offset weaker NII.
- Asset quality trends are improving.
- Management expects further moderation in credit costs and better operating leverage.
- This could drive earnings growth ahead of AUM growth guidance of 22–24%.
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