Shares of Bajaj Finance dropped nearly 6 per cent in Wednesday’s trade following the less-than-expected March quarter results, thanks to higher credit cost and one-time additional provisions. A moderation in FY26 guidance on growth and return on equity (RoE) compared to long term guidance was a major negative from the results, said stock brokers, as they see limited upside potential on the counter post Q4 results.
Following the development, Bajaj Finance shares fell 5.82 per cent to hit a low of Rs 8,560. The stock is up 24 per cent year-to-date. For FY26, the Bajaj Finance management guided for 24-25 per cent asset under management (AUM) growth against 25-27 per cent earlier. It suggested a stable net interest margin (NIM) despite cost of funds (CoF) coming down by 10-15 basis points, JM Financial noted. The NBFC also sees 40-50 basis points improvement in cost to income, lower fee income growth of 13-15 per cent and credit cost in the range of 1.85-1.95 per cent, leading to RoA projection of 4.4-4.6 and RoE estimate of 19-20 per cent.
JM Financial said it likes Bajaj Finance given its ability to navigate across cycles. Though, given expected moderation in growth and RoE profile, the current valuation of 4 times FY27 book value and 21 times FY27 EPS looks rich and provide limited upside in near term. The brokerage still maintained its ‘Buy’ call on the stock with a revised target price of Rs 9,500.
MOFSL said despite a sequential rise in credit costs due to the ECL model refresh, asset quality showed notable improvement. Bajaj Finance will look to accelerate its growth in the unsecured segments in FY26, as the stress in its B2C segments gradually dissipates, the brokerage noted.
“The stock trades at 4.1 times FY27E. Despite a healthy PAT CAGR of 25 per cent over FY25-FY27E and RoA/RoE of 4.1 per cent/21 per cent in FY27E, we see limited upside catalysts given the rich valuations and lack of near-term re-rating triggers. Consequently, we reiterate our Neutral rating on the stock with a target of Rs 10,000 (premised on 4.5x Mar’27E BVPS),” MOFSL said.
Nirmal Bang has trimmed its FY26E PAT estimates factoring in higher expenses. It rolled forward its estimates to March 2027 and suggested a target price of Rs 8,358.
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