Synopsis:
Bajaj Finance shares have jumped 30.5% year to date and more than 40% from the start of the year to an all-time high of Rs. 979, fueled by optimism around potential GST cuts on consumer durables and India’s first sovereign credit rating upgrade in 18 years. These reforms are expected to boost lending volumes, improve margins, and reduce borrowing costs, positioning the stock for further upside.
Bajaj Finance is mainly engaged in the business of lending. BFL has a diversified lending portfolio across retail, SME and commercial customers with a significant presence in urban and rural India.
With a market capitalization of Rs. 5,56,707 cr, the shares of Bajaj Finance Ltd are currently trading at Rs. 898.40 per share, increasing by more than 40% from the start of this year, making an all-time high of Rs. 979 per share.
GST Cuts: Lower EMIs, Stronger Demand
Prime Minister Narendra Modi recently announced plans to reduce GST rates on multiple categories of goods and services, with details expected before the festive season.
Analysts highlight that Bajaj Finance would be a direct beneficiary if the government implements GST rate reductions on consumer durables ahead of Diwali, India’s peak shopping season.
Lower tax rates would reduce monthly installment costs, making consumer products more affordable. This, in turn, is expected to drive demand and boost lending volumes, particularly in Bajaj Finance’s consumer durable financing segment.
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Credit Rating Upgrade: Cheaper Offshore Borrowings
India’s long-term sovereign credit rating was upgraded by S&P Global Ratings to “BBB” from “BBB-”, the first such move in nearly two decades. The upgrade is set to benefit Indian financial companies tapping global debt markets.
Motilal Oswal noted that Bajaj Finance and peers accessing the external commercial borrowings (ECB) market could see a 15–20 basis point reduction in coupon payments, directly easing funding costs and supporting margin expansion.
Investor Takeaway
With GST reforms and lower borrowing costs on the horizon, Bajaj Finance appears well-positioned to sustain its rally. Analysts believe these tailwinds could help the stock break past the Rs. 1,000 mark, though near-term entry decisions depend on investor risk appetite and market timing.
Written by Manideep Appana
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