Bajaj Finance shares jump 4% after strong Q4 results. Why Jefferies, Morgan Stanley and others are bullish

Shares of Bajaj Finance gained as much as 4.2% to the day’s high of Rs 969.40 on the BSE on Thursday after its Q4 profit rose 22% year-on-year (YoY) to Rs 5,553 crore, compared with Rs 4,546 crore in the same period last year.

The company’s assets under management crossed the Rs 5 lakh crore mark, reaching Rs 5.09 lakh crore at the end of March 2026, up from Rs 4.16 lakh crore a year earlier, reflecting a 22% increase. AUM grew by Rs 25,498 crore during the quarter.

Business momentum remained strong, supported by steady customer additions and loan growth. Bajaj Finance booked 12.89 million new loans in Q4, a 20% rise from 10.7 million in the year-ago period. Its customer base expanded 17% YoY to 119.33 million, including 3.93 million additions during the quarter.

Asset quality held steady, with gross non-performing assets at 1.01% and net NPA at 0.41% as of March-end. These compare with 0.96% and 0.44% respectively in the previous year. Provision coverage on stage 3 assets stood at 60%.

Loan losses and provisions declined to Rs 2,008 crore from Rs 2,167 crore a year earlier. The annualised credit cost improved to 1.65% from 2.17%, indicating better collections and portfolio performance.

The company continued to maintain a strong capital position, with a capital adequacy ratio of 21.55%, including Tier-I capital at 20.67%, leaving sufficient room to support future growth.

What are analysts saying?

Jefferies has maintained its ‘Buy’ rating on Bajaj Finance with a target price of Rs 1,210, implying a potential upside of 30%. The brokerage has marginally tweaked its estimates following the results, factoring in slightly higher operating expenses due to investments in gold loan distribution.

Over FY26-29, it expects loan growth at a CAGR of 23%, with some moderation in NIMs and credit costs, translating into a profit CAGR of around 20%.

On management, Jefferies noted that clarity on succession is expected next year. At the board level, Rajiv Bajaj, brother of Sanjiv Bajaj, is set to retire upon completion of his term, though the brokerage does not see this as a concern. It added that Bajaj Finance continues to remain one of the strongest platforms in the sector and retains the stock among its top picks.

Morgan Stanley has maintained its overweight rating on Bajaj Finance, while raising the target price to Rs 1,120 from Rs 1,090 earlier, an upside of 20% from current levels. The brokerage highlighted that adjusted PBT grew 26% YoY and came in ahead of estimates. It also noted a sharp improvement in credit costs, supported by lower bad loan formation.

Management has guided for AUM growth of 22-24% for FY27, along with a net credit cost outlook of 145-160 basis points. On valuations, the stock is seen trading at 22x FY28E price-to-earnings and 4.3x price-to-book.

JM Financial has reiterated its Buy rating on Bajaj Finance with a target price of Rs 1,080, implying a potential upside of 16%.

The brokerage remains constructive on the company’s outlook, citing its strong franchise scale and sustained AUM growth of over 20%. It also highlighted sector-leading return ratios, with superior RoA and RoE supporting earnings visibility. JM Financial noted that a structurally lower credit cost guidance, along with a rising share of secured lending, further strengthens the company’s medium-term outlook.

In addition, continued gains from AI-led operating efficiencies and robust provisioning buffers are expected to enhance resilience and drive consistent compounding over time.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)