Bajaj Finance, the leading non-banking financial company (NBFC) in India, recently unveiled its Bajaj Finance Q2 Results, leaving analysts in anticipation of an exciting journey ahead. The question on everyone’s mind: will Bajaj Finance’s shares soar to Rs 7,400 or even Rs 10,000? Analysts have weighed in on this burning question following the company’s in-line Q2 performance.
Solid Q2 Performance
Bajaj Finance reported a robust performance in the September quarter, with a 28% YoY surge in net profit, totaling Rs 3,551 crore, and a 26% jump in net interest income (NII) reaching Rs 8,398 crore. While the net interest margin slightly dipped by 11 basis points to 10.3% due to the increased cost of funds at 7.67%, the company’s fundamentals remained strong.
Analysts have highlighted that Bajaj Finance remains well-capitalized and possesses sufficient liquidity to capitalize on the upcoming secular credit upcycle. Despite a slower growth in net interest income compared to asset under management (AUM) growth, the company displayed healthy profitability, thanks to the operating leverage coming into play.
Analyst Projections and Target Prices
Several brokerages have expressed their confidence in Bajaj Finance’s growth prospects. InCred Equities, for instance, revealed that Bajaj Finance intends to raise Rs 8,800 crore in equity to support its next phase of growth, including expanding into new lending areas and increasing penetration in existing markets.
Nirmal Bang Institutional Equities made marginal changes in FY24 estimates and raised FY25E PAT by 5% based on strong growth in net interest margin (NIM) and operating leverage. They derived a target price (TP) of Rs 9,520, reflecting an 18% upside potential for the stock.
Meanwhile, InCred Equities increased its earnings estimates by 9.2% for FY25 and 8.1% for FY26, elevating its target price to Rs 9,850 from Rs 9,000.
PhillipCapital emphasized Bajaj Finance’s historical track record of managing credit costs efficiently, offering a compelling investment argument. They suggested a target price of Rs 10,000, highlighting the granular and efficient collection architecture of Bajaj Finance.
Motilal Oswal Securities assessed the stock’s worth at Rs 9,600, keeping an eye on Bajaj Finance’s evolution in the payments landscape and the adoption of its payment offerings. They also monitored the potential offset of NIM compression through operating leverage.
Mixed Views
However, not all analysts share the same optimism. Kotak Institutional Equities maintained its ‘Reduce’ call on the stock. While recognizing macro tailwinds and Bajaj Finance’s aggressive franchise expansion, they factored in rising funding costs and adjusted their fair value on the stock to Rs 7,400 from Rs 6,800.
Conclusion
As Bajaj Finance continues to navigate India’s financial landscape, the consensus among analysts remains predominantly positive, with projections of substantial share price growth. Investors are eagerly watching the company’s strategic moves and execution as it enters its next phase of expansion. The future indeed looks promising for Bajaj Finance, with the potential for shares to reach new heights.
This article is for informational purposes only and should not be considered as investment advice. Readers are advised to conduct their own research and consult with financial experts before making investment decisions.