The Indian stock market has been on a long losing streak, with the Nifty 50 dropping to 22,319 and the BSE Sensex falling to 73,859. This decline is driven by economic uncertainty, weak earnings, high valuations, FII selling, and global factors like gold price movements.
Despite such a downturn, Bajaj Finance has surged over 26 percent in the past six months. Here’s what’s driving their gains.
With a market capitalization of Rs 5,33,155.69 crore, Bajaj Finance Ltd fell 1 percent in Friday’s trading session and is currently trading at Rs 8600. The stock had previously hit a fresh 52-week high at a price level of Rs 8,736 per share on Thursday.
The stock has consistently outperformed the index with over 25 percent returns year-to-date as compared to Nifty 50 which fell 6 percent during the same period.
Company Overview
Bajaj Finance is a non-banking financial company with a focus on lending, offering a diversified portfolio across retail, SME, and commercial customers in both urban and rural India. It also accepts public and corporate deposits and provides various financial services.
Financial Performance
In the latest quarter, Bajaj Finance Ltd reported a 27 percent YoY increase in total income from Rs 14,167 crore to Rs 18,058 crore. On a quarterly basis, the income rose 6 percent from Rs 17,095 crore in Q2 FY25.
This was accompanied by a modest 18 percent YoY increase in net profits from Rs 3,639 crore to Rs 4,308 crore. On a quarterly basis, the profits went up 7 percent from Rs 4,014 crore in Q2 FY25.
Management Guidance
For FY26 Bajaj Finance is expected to have an AUM growth of ~ 25 percent, credit costs less than 2 percent and profit after tax (PAT) growth of ~ 22-23 percent, contingent on a stable external environment. Credit costs have now peaked and will remain below the guided outer range, as a result the company can focus on accelerating AUM growth in the (Rural) B2C segment.
Strategic Partnerships
Bajaj Finance has recently tied up with Bharti Airtel, a major telecom company, to tap into its customer base. Since there are 200 million Airtel users who are not yet Bajaj Finance customers, this partnership creates a massive opportunity for the company to cross-sell financial products like loans, credit cards, and insurance.
Brokerage View
Morgan Stanley has maintained an “overweight” rating on Bajaj Finance, increasing its price target to Rs 9,300. The firm noted improved visibility of over 25 percent EPS growth for FY26, contingent on macroeconomic conditions, emphasizing Bajaj Finance as an attractive large-cap stock.
Jefferies has also assigned a “buy” rating with a revised price target of Rs 9,270. Analysts highlighted stabilizing asset quality and tapering credit costs from the next quarter as key factors. The firm also expects a smooth CEO transition, with Rajeev Jain potentially staying involved while the Deputy CEO moves up.
Industry Outlook
India’s financial services sector is growing rapidly, with private wealth management expected to expand significantly. By 2027, India could have 16.57 lakh HNWIs (High Net Worth Individuals), making it the fourth-largest private wealth market by 2028. The insurance market is projected to reach USD 250 billion by 2025, while mutual fund AUM could hit Rs 95 lakh crore by the end of 2025.
Written by Shwetha Sairam
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