Bajaj Finance shares dropped approximately 6.5% in early trading on Tuesday after the company reduced its growth forecast for FY26, even though its Q2 FY26 results largely aligned with market expectations. The stock price of Bajaj Finance fell to as low as Rs 1,015 during the morning session. Similarly, Bajaj Finserv, an associate company, saw its stock decline by 6.5% to Rs 1,981, with its Q2 results expected later today.
The leading NBFC's performance for the July-September quarter indicated growth in essential metrics, although there was a decline in asset quality. Analysts anticipate short-term fluctuations due to reduced growth forecasts, yet most brokerages are positive about the stock's long-term outlook.
On Monday, Bajaj Finance announced a 22% increase in consolidated net profit, reaching Rs 4,875 crore for the July-September period. Net interest income also rose by 22% to Rs 10,785 crore, and assets under management (AUM) grew by 24% year-on-year to Rs 4.62 lakh crore. The customer base expanded to 110.6 million, with 4.1 million new customers added during the quarter.
Gross non-performing assets increased to 1.24 percent from 1.03 percent in the last quarter, while net non-performing assets were at 0.6 percent. The company marginally reduced its FY26 asset under management growth forecast to 22-23 percent, due to weaker trends in the SME and housing sectors.
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Despite the management's reduced AUM growth forecast, most brokerages maintained a favorable outlook on Bajaj Finance following its Q2 FY26 results, although some expressed caution.
Morgan Stanley has assigned an Overweight rating to Bajaj Finance shares, setting a target price of Rs 1,195. The firm observed that the reduced FY26 AUM growth forecast and steady NIMs might not meet investor expectations. Nonetheless, the brokerage highlighted potential reductions in credit costs and ongoing cost efficiencies as favorable factors, suggesting that any short-term stock decline could be a chance to invest further.
HSBC has given a Buy recommendation and increased its target to Rs 1,200, noting that the Q2 EPS met expectations and that stable RoA and RoE were bolstered by improved cost-to-income ratios. The bank anticipates that growth in AUM, effective cost management, and normalized credit costs will lead to a 28 percent EPS CAGR from FY26 to FY28. Consequently, it has raised both its EPS projections and valuation multiple to 5.4 times the FY27 BVPS.
Jefferies issued a Buy rating with a target of Rs 1,270, noting a 23 percent year-on-year profit increase, which slightly exceeded expectations. Assets under management increased by 24 percent, and the festive season performance was robust, although growth guidance was reduced by 100 basis points to 22-23 percent. Credit costs were high but are anticipated to decrease, with a projected profit CAGR of 23 percent from FY25 to FY28.
CLSA has issued an Outperform rating with a target of Rs 1,200, highlighting robust results across various metrics, including a 24 percent increase in AUM driven by secured loans. The report observed stable net interest margins, a slight improvement in fee income, and a minor increase in credit costs by 3 basis points to 2 percent. The lending company maintained its credit cost guidance at 1.85-1.95 percent, while reducing its loan growth forecast.
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