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Motilal Oswal Report
Motilal Oswal Financial Services has initiated coverage on Bajaj Finserv Ltd. with a 'Neutral' rating, citing a structurally strong but gradually evolving growth profile and a balanced risk‑reward at current valuations.
The brokerage believes Bajaj Finserv is entering a phase of increasingly broad‑based growth, supported by earnings stability from Bajaj Finance, a transition toward margin‑led and value‑accretive growth in its insurance businesses, and new digital platforms moving closer to scale and breakeven.
Improved execution across both life and general insurance businesses, along with disciplined capital allocation in emerging subsidiaries, is expected to enhance visibility on consolidated value creation over the medium term.
Motilal Oswal highlighted that the company's diversified earnings profile, strong balance sheet and improving contribution from non‑lending businesses justify a premium holding‑company valuation. The brokerage expects profit after tax from established businesses—Bajaj Finance and Bajaj General Insurance and the value of new business from Bajaj Life Insurance to grow at a FY26–28 compound annual growth rate of 28%, 16% and 19%, respectively.
Meanwhile, emerging businesses are expected to gradually move toward breakeven as scale improves. At a consolidated level, Motilal Oswal estimates Bajaj Finserv's revenue and PAT to grow at a CAGR of 15% and 17%, respectively, over FY26–28, with return on equity (RoE) in the range of 13–14%.
Based on a sum‑of‑the‑parts valuation, Motilal Oswal has arrived at a target price of Rs 1,900, implying a FY28E price‑to‑earnings multiple of 22x. Given the current valuation and execution trajectory, the brokerage has initiated coverage with a Neutral stance.
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