Bajaj Finance shares tank over 5% after Q4 results. Buy, hold or sell?

India Today

30-04-2025

Shares of Bajaj Finance slipped sharply in early trade on Wednesday, even as the company posted strong earnings for the March quarter. The stock was trading 5.2% lower at Rs 8,608.45 at around 10:18 am on the Bombay Stock Exchange (BSE).The stock reacted to a set of numbers that, while solid on paper, failed to match elevated market expectations. In the fourth quarter of FY25, Bajaj Finance reported a 19% year-on-year jump in net profit to Rs 4,546 crore, driven by a 22% rise in net interest income to Rs 9,807 crore.advertisementTotal income climbed 23% to Rs 11,917 crore during the same period. The company's consolidated assets under management rose 26% to Rs 4.16 lakh crore, while new loans booked during the quarter surged 36% to 10.7 million.
Despite this, investors on Dalal Street seem unimpressed. Higher loan loss provisions, which came in at Rs 2,329 crore compared to Rs 1,310 crore in the year-ago period, dented sentiment.LATEST TARGET PRICE, BROKERAGE VIEWSAnalysts also flagged a minor decline in net interest margin and the impact of a Rs 290 crore tax reversal that provided one-time support to the bottom line.Adding to the cautious tone was the company's revised guidance under new CEO Anup Saha. Bajaj Finance trimmed its FY26 AUM growth forecast to 24–25%, down from the earlier 25–27% range. Its fee income guidance, pegged at 13–15%, also came in lower than expected, raising concerns about operating leverage.advertisementTo offset some of the investor disappointment, Bajaj Finance announced a raft of shareholder-friendly moves. These included a 1:2 stock split, a 4:1 bonus issue, a special dividend of Rs 12, and a final dividend of Rs 44 per share.Still, these announcements weren't enough to lift the stock, which has risen in only one of the past five sessions.Analyst commentary reflected the split in sentiment. HSBC maintained a Buy rating with a price target of Rs 10,800, confident in the company's ability to deliver 25% EPS growth through FY28. Jefferies also held a bullish view with a Rs 10,440 target, citing credible leadership transition and moderated credit costs. Emkay Global reiterated its Add rating with a Rs 9,200 target, though it revised earnings forecasts slightly lower.In contrast, Citi downgraded the stock to Neutral and cut its price target to Rs 9,830. The brokerage flagged a 9-basis-point drop in NIM, higher-than-expected credit costs, and slower AUM growth as causes for concern.Macquarie and Bernstein were more bearish, both maintaining Underperform calls with targets below Rs 6,500, warning of valuation risks and earnings headwinds in FY26.Morgan Stanley, however, backed the stock with an Overweight rating and a target of Rs 10,500, calling FY26 earnings prospects strong despite Q4's minor setbacks.advertisementOf the 38 analysts covering Bajaj Finance, 25 continue to recommend buying the stock, while eight suggest holding and five recommend selling. Despite Wednesday's drop, the stock is up over 24% year-to-date and over the past twelve months.Meanwhile, shares of Bajaj Finserv also tumbled 6% after reporting Q4 results. (Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)