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

Bajaj Finance shares slipped 2 per cent in trade, logging an intra-day low at ₹943.45 per share on BSE. At 9:22 AM, Bajaj Finance’s share price was trading 1.1 per cent lower at ₹954.05 per share. In comparison, the BSE Sensex was down 0.10 per cent at 83,654.19. While analysts are positive on the company's growth outlook, few flag higher provisions.  

 

Bajaj Finance reported its Q3FY26 numbers on Tuesday, after market hours. 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.  Check detailed results here 

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 (annualised on on-book AUMs). 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.

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

The brokerage said Bajaj Finance reported an inline quarter. Asset quality trends were encouraging, w9,704.59 ith gross/net stage 3 improved 2 bps/13 bps Q-o-Q and a sharp decline in net slippages/write-offs. Management guided for 22 per cent AUM growth in FY26 and expects credit costs to trend lower to 1.65–1.75 per cent over FY27, despite higher provisioning buffers.

 

The stock has corrected in the last four months by 12 per cent and now trades at 3.7x of FY28 BVPS; thus, the downside looks limited for 22 per cent loan compound annual growth rate (CAGR) over FY26-28E and avg. Return on asset/ return on equity (RoA/RoE) of 4.2 per cent/21 per cent during FY27/28E. Analysts have broadly maintained FY27/28E earnings per share (EPS) estimates and upgraded this stock, valuing at 4.3x FY28 P/BV.

 

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