The brokerage firm Jefferies maintained a ‘BUY’ rating on Bajaj Finance with a target price of Rs 9,270. The firm expects Bajaj Finance to make a 24% CAGR in profits over FY25-27.
“Valuations at 4.4x FY26 PB are attractive for high growth and ROE (20%), hence we retain BAF among top picks with a price target of Rs 9,270,” Jefferies noted, basing its projection on a 4.6x March 2027 PB ratio, including the value of Bajaj Finance’s stake in its subsidiaries.
1. Jefferies on Bajaj Finance: Strong earnings and loan growth
According to Jefferies, Bajaj Finance delivered a strong Q3 performance, surpassing estimates by 5%. The company posted a net profit of Rs 43 billion which is 18% YoY rise. The company’s loan book grew by 28%, fuelling a 23% increase in NII and a 17% rise in fee income.
Furthermore, the key areas driving the growth include urban B2C, SME, and loan against securities (LAS), while the two and three-wheeler business witnessed consolidation.
Also ReadWhy has Nuvama downgraded this Vijay Kedia-owned stock 2. Jefferies on Bajaj Finance: Asset quality stable
As per the brokerage house report, Bajaj Finance’s asset quality which faced some stress in the past few quarters, appears to be stabilising.
“This quarter, it added Rs 6bn to the stressed loan pool compared to Rs 11bn in Q1 and Rs 5bn in Q2. This has helped to manage credit costs near 2.2% of loans, and management expects the credit costs to fall from next quarter,” the brokerage said.
The brokerage house further pointed out that the rural B2C loan performance is stabilising, which will help the company to expand its loan book at a 16% YoY pace, a recovery from the 5% growth seen in Q1. While urban B2C remains slightly subdued, tightening credit norms and incremental improvements are expected to lower credit costs over the next few quarters.
3. Jefferies on Bajaj Finance: CEO transition on the horizon
Another key factor highlighted by the firm is of the company’s upcoming leadership transition, with CEO Rajeev Jain expected to remain actively involved while the current Deputy CEO Anup Saha is likely to be elevated to the top position.
“Management clarified that succession-related announcements may be made in March, and the current CEO plans to stay actively involved at BAF and its subsidiaries to drive short and medium-term goals,”
» Read More
