Bajaj Finance shares rallied 6.1% to an intraday high of Rs 7,088 after it reported stable Q2 earnings numbers. Also, Bajaj Finance was the top gainer in the Nifty 50. The stock is now 10% away from its 52-week high of Rs 7,884.90, which it touched on, coincidentally, October 23, 2023.
On October 22, the finance company reported a growth of 13% on year in Q2 FY25 standing at Rs 4,013.7 crore compared to Rs 3,550.8 crore in the same quarter a year ago. Point to be noted, the company gained Rs 2,544.11 crore by paring a stake in Bajaj Housing Finance.
Its net interest income rose 22.8% to Rs 8,837.7 crore in Q2 FY25, against Rs 7,196.3 crore in the same quarter of the last fiscal.
Brokerages on Bajaj Finance
Motilal Oswal
“Earlier, we were under the impression that credit costs would remain elevated in FY25 and normalize from FY26 onwards. However, the company has increased its credit costs guidance to 185-195bp (vs. 175-185bp earlier) for FY26. BAF’s key product segments (until now) have been the secular growth segments. However, its foray into multiple new areas, such as cars, tractors, CVs, and MFI, could (in future) make its growth and credit costs vulnerable to cyclicality, despite having a well-diversified product mix,” said the brokerage firm Motilal Oswal in a research report. Despite a healthy net profit growth of 24% over FY24-FY27 and RoA/RoE of 4.1%/21% in FY27, the brokerage firm expects limited upside catalysts for the company.
Consequently, it kept the “Neutral” rating unchanged on the stock with a price target of Rs 7,320.
Elara Securities
The company’s Q2 FY25 earnings stood largely in line with the brokerage’s estimates, on the back of higher-than-anticipated provisions, subdued guidance, and a cautionary approach to business expansion. While its B2B, auto, and rural portfolios remain pain points, new businesses (2W, car, tractor & gold) in their infancy also would impinge medium-term growth prospects. “With risk management amidst sectoral headwinds taking centre stage, valuations have already touched multi-year lows, prompting us to retain our Accumulate rating…” The brokerage slashed the target price to Rs 7,683 from Rs 8,053.
InCred Equities
“With pain in margin & credit costs already behind, BAF is attractively priced at current levels. We retain our high-conviction ADD rating on it with a target price of R s9,000,
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