Bajaj Finance: Why Nomura is bullish despite competition, regulatory risks

Despite regulatory overhang following the Reserve Bank of India's (RBI) draft norms on revolving credit products and growing competition in the personal loans space, global brokerage Nomura remains bullish on Bajaj Finance stock. 

 

The brokerage, in a note on August 20, said that it estimates Bajaj Finance's assets under management (AUM) for FY27 to grow at 25 per cent year-on-year (Y-o-Y) in spite of these risks amid plans to scale up the gold loan business and MSME loan recovery. Nomura also raised the target price for Bajaj Finance to ₹1,270 from ₹1,140 earlier.

 

Bajaj Finance shares have gained 12.56 per cent so far in 2026 and 22.18 per cent in a year. On Friday, the blue-chip NBFC stock was trading flat.

 

Overhang on Bajaj Finance

Earlier this month, Bajaj Finance shares had faced some selling pressure after the RBI's proposal to allow NBFCs to offer only term loans and discontinue revolving credit products, except for those authorised to issue credit cards. The central bank has proposed that NBFCs shall only offer credit products that are like term loans. READ MORE

 

However, Deputy Governor Shirish Chandra Murmu has indicated that the RBI is open to suggestions and will also be considering any practical challenges due to the draft regulation on revolving credit. However, he reiterated that revolving credit was never allowed for NBFCs, and this regulation was brought in for better clarity.

 

In Nomura's view, the definition of revolving credit in the draft RBI document left much open for interpretation, and it awaits clearer definitions in the final regulation. 

 

Furthermore, concerns around the company's urban personal loan book have kept sentiment in check. The growth has slowed down to below 20 per cent from Q3FY26, highlighted Nomura on the back of elevated competitive intensity. Bajaj Finance's personal loan book is still equal to the cumulative book of nine next NBFCs.

 

Outlook

"We believe Bajaj Finance's consolidated AUM growth in 2Q27F could be subdued due to regulation on flexi loans (part of personal loan) and competitive intensity. However, management plans for a gold loan scale-up and an MSME loan recovery (from Q327F) could lead to 24-26 per cent Y-o-Y AUM growth in the closing quarter of FY27F. Management during its 4Q26 results conference call had guided for 22-24 per cent AUM growth for FY27," Nomura analysts said.

 

Overall, it also lifted net profit estimates by 3 per cent over FY27-29F.

 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.