Motilal Oswal downgraded the stock to neutral with a target price of Rs 7,800 saying that the management’s guidance for FY25 is below its long-term guidance on multiple metrics such as AUM growth, credit costs, RoA, and RoE.
“Bajaj Finance’s key product segments (until now) have been the secular growth segments. However, its foray into multiple newer products such as cars, tractors, CVs, and potentially MFI, could (in future) make its growth vulnerable to cyclicality despite having a well-diversified product mix,” Motilal said.
UBS has maintained a sell rating with a target price of Rs 6,800 while highlighting elevated credit costs and weakened product mix in the quarter. Macquarie has maintained a neutral call with a target price of Rs 8,100.
Trading at 4.0x FY26E P/BV and 20x P/E, a trigger for the stock in the near term could be if RBI revokes its ban on ‘E-com’ and ‘Insta EMI Card’. The company has addressed the deficiencies in the process that led to the RBI embargo, and has formally requested the regulator to lift the ban.
The management has given guidance for FY25 AUM growth of 26-28% and RoA of 4.6-4.8% of AAUM, with profitability improving in the second half as the first half will see some moderation in NIM on account of elevated borrowing cost. “To reflect the Q4 developments and management commentary on future outlook, we adjust our estimates leading to a 3% cut in FY25E PAT, albeit a 1% increase in FY27E PAT. We reiterate our buy rating on the stock, with unchanged Mar-25 target price of Rs 9,000 per share, implying FY26E consolidated P/BV of 5.1x,” Emkay said.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
