Bajaj Finance down 2% on higher provisions; brokerages optimistic on growth

Brokerages are divided on Bajaj Finance post its December quarter (Q3FY26) results released on February 3, 2026, after market hours. Post Q3, brokerages were divided on Bajaj Finance, with a few raising targets on valuation comfort, while others expressed caution on the credit cost trajectory.

 

In the December quarter, Bajaj Finance reported a 6 per cent year-on-year (Y-o-Y) decline in consolidated net profit at ₹3,977.85 crore, as compared to ₹4,246.54 crore in Q3FY25. Its revenue from operations stood at ₹21,213.89 crore, as compared to ₹18,035.13 crore a year ago. 

 

Bajaj Finance shares slipped 2 per cent in trade, logging an intra-day low at ₹943.45 per share on BSE. The stock closed 0.08 per cent lower at ₹964 per share. In comparison, the BSE Sensex settled 0.09 per cent higher at 83,817.69. 

Brokerages’ view on Bajaj Finance

Nomura | Buy | Target cut to ₹1,195 from ₹1,205

Nomura said Bajaj Finance (BAF) has voluntarily revised loss-given-default (LGD) floors across products, resulting in accelerated provisions of ₹1,400 crore in Q3FY26. Excluding this, credit cost stood at 192 basis points (bps), lower than 205 bps in the previous quarter. Management chose to permanently strengthen LGD assumptions rather than rely on temporary overlays, reflecting a conservative balance sheet approach. Nomura now expects the credit cost of 197 bps in Q4FY26, with management hopeful of achieving 165–175 bps from FY27 onwards, guidance for which will be shared in the next results call.

 

The brokerage noted that MSME stress has inched up, with Stage 2+3 rising 23 bps quarter-on-quarter (Q-o-Q) and 100 bps Y-o-Y, prompting management to slow MSME growth to 11 per cent Y-o-Y in Q3FY26. However, growth in this segment is expected to recover to the 20 per cent range in two to three quarters.

 

Nomura also highlighted intensifying competition, including increased participation by PSU banks in segments such as personal loans, and elevated customer leverage, which has remained flat Y-o-Y but at high levels over recent years. Despite this, management sees room for market share gains across most products.

 

Given higher credit cost assumptions, Nomura has cut FY26 net profit estimates by 3 per cent and raised long-term credit cost assumptions in its residual income model. The brokerage revised its target price, implying a Dec-27 P/B of 4.7x and one-year forward P/B of 4.5x. While incremental growth may come at varying credit costs, Nomura remains optimistic on Bajaj Finance’s growth outlook.

Emkay Global Financial Services | Reduce | Target cut to ₹950 from ₹1,000

Emkay Global said Bajaj Finance reported a softer-than-expected Q3, with weakness across growth, profitability, and credit costs. While management remains confident of containing credit costs within the 1.65–1.75 per cent range, Emkay noted that changes to the expected credit loss (ECL) model will result in an additional annual provisioning impact of ₹300–400 crore.

 

Factoring in the Q3 performance and management commentary, Emkay has cut its FY26 earnings per share (EPS) estimates by 5 per cent, while keeping FY27–FY28 estimates broadly unchanged.

JM Financial Institutional Securities | Upgraded to Buy from Add | Target raised to ₹1,125 from ₹1,100

The brokerage said Bajaj Finance reported an inline Q3. The elevated provisioning was driven by accelerated ECL charges, following gains from a subsidiary stake sale, which pushed ECL/EAD up to 2.04 per cent from 1.67 per cent in Q2.

 

JM Financial noted that the stock has corrected 12 per cent over the past four months and now trades at 3.7x FY28 book value per share (BVPS), limiting downside given a 22 per cent loan CAGR over FY26–28E and average RoA/RoE of 4.2 per cent/21 per cent in FY27–28E. The brokerage has maintained its FY27–28E EPS estimates.

 

Anand Rathi | Buy | Target raised to ₹1,130 from ₹1,045

The brokerage noted that Bajaj Finance reported a healthy performance in Q3FY26. Adjusted for one-off of accelerated ECL provisioning, PAT would have been higher than estimates. With the best-in-class execution skill, a strong artificial intelligence (AI) platform, combined with a sharp correction in the stock price, the brokerage revised its target, valuing Bajaj Finance shares at 4.5x FY28e consolidated book value (BV), compared to 4.5x Sep’27e BV previously for 4 per cent expected RoA and 20 per cent RoE.

 

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