Geojit Investments has retained a BUY recommendation on Bajaj Finance Ltd., setting a revised target price of Rs 1,045 against a current market price of Rs 912, implying an upside of about 15%. The brokerage’s thesis is anchored in resilient AUM growth, firm profitability, and improving portfolio quality, even as the lender navigates a mildly rising gross NPA ratio. The report argues that Bajaj Finance remains one of India’s most formidable NBFC franchises, supported by diversification across retail, SME and commercial lending. Geojit also highlights the company’s accelerating AI-led transformation as a meaningful long-term efficiency lever.

Growth engine stays hot

Bajaj Finance delivered another strong quarter, with consolidated total income rising 18% year-on-year to Rs 21,607 crore in Q4FY26. The performance was powered by healthy AUM expansion and steady traction across lending categories. Consolidated AUM climbed 22.4% year-on-year to Rs 5,09,975 crore, underscoring the company’s scale advantage and broadening customer franchise. Net interest income increased 19% to Rs 11,837 crore, while the cost of funds stayed broadly controlled at 7.41%.

Profitability remained impressive, with reported PAT rising 22.2% year-on-year to Rs 5,553 crore. That growth was supported by stronger business momentum and lower loan losses and provisioning expense. The company’s quarterly pre-provisioning profit improved 20.5% year-on-year to Rs 9,417 crore, while reported EPS rose to Rs 8.8 from Rs 7.2 a year earlier. For investors, that is a sign of a lender still expanding without losing profitability discipline.

Asset quality and margins

Asset quality was mixed, but not alarming. Gross NPA rose to 1.01% from 0.96% a year earlier, while net NPA improved to 0.41% from 0.44%. Provision coverage on Stage 3 assets strengthened to 60% from 54%, suggesting the lender has kept a firmer grip on problem accounts. In plain terms, the balance sheet remains healthy, though the rise in gross stress bears watching.

Margins also held up reasonably well. Bajaj Finance’s management indicated stable economics, and Geojit notes that the company’s lending mix is increasingly benefiting from higher contribution from gold loans, vehicle finance and MSME loans. The brokerage sees this diversification as a cushion against cyclical weakness in any one segment. That is important because a diversified NBFC tends to be more resilient through rate, credit and demand swings.

FY27 guidance matters

The management’s FY27 outlook is constructive and, in some areas, ambitious. It expects AUM growth of 22% to 24%, 15 million to 17 million new customers, RoA of 4.4% to 4.6%, and RoE of 19% to 20%. At the same time, it expects some moderation in NIM, along with credit cost in the range of 1.45% to 1.60%, subject to macro stability and easing geopolitical uncertainty. That combination points to a business still scaling, but with a slightly more cautious stance on profitability assumptions.

Geojit has revised upward its estimates for FY27 and FY28, reflecting stronger operating momentum. It now pegs FY27E net interest income at Rs 55,263 crore and FY28E at Rs 68,457 crore, while net profit is estimated at Rs 25,599 crore and Rs 31,940 crore respectively. EPS is projected to rise from Rs 41.1 in FY27E to Rs 51.3 in FY28E. The market will likely view these estimates as a sign that Bajaj Finance’s earnings compounding remains intact.

Gold loans and MSME

Gold loans emerged as a standout growth pocket in the quarter. The gold loan book jumped 115% year-on-year to Rs 17,831 crore, equal to about 3.5% of AUM. Bajaj Finance added 138 branches in the quarter, taking its network to 1,507, and management believes gold loans can scale to about 5% of AUM by FY27. That makes the segment a meaningful incremental lever in the near term.

MSME and business loans were softer, growing only around 6% year-on-year due to proactive risk actions taken since Q2FY26. Management expects that segment to return to double-digit growth in the second half of FY27. The captive two-wheeler and three-wheeler portfolio has also become much smaller, now below 1% of AUM, though it still contributed 13% of GNPA and about 5% of quarterly credit costs. Management expects that pool to fall below Rs 1,500 crore by September 2026, which should support credit cost improvement.

AI push could help

Geojit views Bajaj Finance’s AI-led transformation as a strategic differentiator. The company plans to expand its dedicated AI team to around 363 by June 2027 from 203 people, while deploying more than 800 autonomous agents. The intended use cases span underwriting, collections, customer engagement and operating workflows. If executed well, this could improve turnaround time, productivity and customer experience while supporting operating leverage.

The broader message is clear: Bajaj Finance is not merely relying on loan growth. It is also trying to strengthen decisioning and efficiency through technology, which can matter greatly in consumer finance where speed and precision often separate leaders from laggards. That kind of execution can justify premium valuations for longer than markets sometimes expect.

Levels for investors

Geojit’s key valuation call is built on 3.9x FY28E book value, with a target price of Rs 1,045. The stock’s 52-week range is Rs 788 to Rs 1,102, so the brokerage’s target sits close to the upper end of the recent trading band. On that basis, the stock appears to be pricing in steady growth rather than explosive re-rating. Still, the upside to target remains attractive for long-term investors seeking a high-quality NBFC franchise.

For investors, the stock remains a quality compounder rather than a deep-value play. The valuation is rich, but the franchise quality, earnings visibility and capital efficiency still support the premium. Geojit’s stance suggests that Bajaj Finance can continue to deliver measured upside as long as credit quality holds and AUM growth stays near guidance.