Bajaj Finance shares: BNP Paribas predicts another 19% rally, raises target

Bajaj Finance share price: The stock has surged over 30 per cent so far in calendar year 2025, sharply outperforming the stock markets. Bajaj Finance shares hit a record high of ₹9,258.95 on March 25

Bajaj Finance shares could rally another 19 per cent from here on, predict analysts at global brokerage BNP Paribas, who have set a share price target of ₹10,700 for the stock.

 

Raising their target price from ₹10,020, BNP Paribas analysts said Bajaj Finance is expected to remain on a 20-per cent growth runway till 2030, providing ample visibility on earnings improvement amid monetary policy easing and its benefit to the company's margins.

 

"Our 3 per cent increase in FY26-27 earnings estimate comes from building in greater visibility on monetary easing and the benefit to the company's net interest margin (NIM). Admittedly, valuation at 4.9x FY26E price-to-book (P/B) is no longer as compelling as earlier. However, with credit costs normalising and margins improving from borrowing cost drop, FY26 earnings growth supports our 'Outperformance' stance," Santanu Chakrabarti of BNP Paribas said in his report.

 

On the bourses, Bajaj Finance shares slipped 1.5 per cent in the intraday trade on the National Stock Exchange (NSE), to hit a low of ₹8,861 per share. At 12:40 PM, however, Bajaj Finance shares were down 1 per cent as against 0.36 per cent fall in the Nifty50 index.

 

Notably, the stock has surged over 30 per cent so far in calendar year 2025, sharply outperforming the stock markets. Bajaj Finance shares hit a record high of ₹9,258.95 on March 25, 2025.

 

BNP Paribas on Bajaj Finance stock

According to Chakrabarti of BNP Paribas, the steady rise in Bajaj Finance's credit costs during the first three quarters of financial year 2024-25 (FY25), coupled with worsening commentary on unsecured loans and credit cards, and regulatory tightening on unsecured loans, dented investor sentiment.

 

The management, too, said that its "normalised" credit costs would be 180-190bps, which was higher than the levels of 140-160bps, seen till the end of FY24, in the aftermath of the Covid-19 pandemic. This, along with the management's forecast of around 205-210bps credit costs for FY25, resulted in the stock getting downgraded by various brokerages.

 

"We, however, believe the market's reaction to the credit cost increase in 9MFY25 was overdone given that Bajaj Finance enjoyed a high pre-tax return on asset (RoA) buffer, even at the peak of the borrowing cost hardening cycle," BNP Paribas said.

 

The brokerage's channel check on two problem areas -- 2-wheeler and 3-wheeler financing, and rural B2C loans -- reveal that the two segments form only 5 per cent and 5.3 per cent of Bajaj Finance's gross loans, respectively. This implies that the 'problem' segments aggregate to about a tenth of the overall loan portfolio.

 

As Bajaj Finance is more focussed on urban and suburban loans, BNP Paribas opines that the NBFC could scale down the rural B2C loans, if the need arises.

 

"Over the past decade, Bajaj Finance has delivered strong asset quality performance, despite robust AUM growth, and exposure to credit segments that are below prime in the traditional sense. We believe being risk-conscious and collection-focused is embedded into the company's DNA and see no signs of it changing," it said.

 

Bajaj Finance growth outlook

Bajaj Finance added around 5 million new customers in an overall weak Q3FY25, reflecting the sustenance of high growth. Given this, BNP Paribas projects around 15 per cent CAGR in customers, 10 per cent annual benefit of loan upselling and 5-6 per cent annual systemic inflation, making its 26-27 per cent next 5-year growth guidance a viable proposition.

 

"We think Bajaj Finance is well positioned to deliver loan/EPS CAGR of c27 per cent/29 per cent, while maintaining RoE at 20 per cent over FY25E-27," it said.

 

As a word of caution, however, the brokerage said that the low-hanging fruit part of Bajaj Finance stock's re-rating is now in the rearview mirror. "While Bajaj Finance is no longer a re-rating candidate, it remains a healthy compounding story," it said.