Mirae Asset Sharekhan has issued a Buy recommendation for Bajaj Finance Limited, citing robust operational metrics, prudent risk management, and strong growth prospects driven by regulatory tailwinds and successful digital transformation. The research underscores Bajaj Finance’s strategic advantage in consumer financing, impressive asset quality, and operational efficiencies poised to counter margin pressures and macroeconomic headwinds. With targeted initiatives to optimize cost structure and safeguard asset quality, the firm maintains a price target of Rs 1,150, offering attractive upside from current levels.

Investment Rationale

Bajaj Finance is at an inflection point, with Mirae Asset Sharekhan reiterating a BUY call and setting a compelling price target of Rs 1,150. The stock currently trades at Rs 1,013, suggesting small upside from current levels. However, Bajaj Finance can also be bought if there is a decline, offering better returns on medium term investments. The company’s dominance in consumer finance and its embrace of digital innovation fuel industry-leading growth and operational efficiency. Regulatory reforms and macro fundamentals are positioned as tailwinds for loan growth over the next two years. The resilience in margins, improvement in deposit costs, and prudent risk management serve as anchors for this optimistic view. Nevertheless, management vigilance regarding asset quality and sector volatility should be on every investor’s radar.

Bajaj Finance: Key Levels and Investor Targets

Recommendation: BUY
Current Market Price (CMP): Rs 1,013
Target Price: Rs 1,150
Stop Loss: Rs 950 (suggested for risk-averse traders)
Support Zone: Rs 980—1,000 | Resistance Zone: Rs 1,100—1,150

The stock’s near-term support resides at Rs 980, while a clear breakout above Rs 1,100 could catalyze fresh momentum toward the stated target. Investors are advised to monitor price action at these pivot levels as momentum builds toward FY27 financial goals.

Financial Performance Highlights

Outstanding AUM Growth: Bajaj Finance’s assets under management (AUM) are forecasted to accelerate at a CAGR of 25% from FY25 to FY27, reaching Rs 6.45 lakh crore by FY27.
Resilient Margins: Net interest margins (NIMs) are projected to remain steady at around 9.9% of average AUM by FY27, supported by declining borrowing costs and growing low-cost deposits.
Profitability Milestones: FY27 projected PAT is a robust Rs 26,844 crore, translating to EPS of Rs 43.2. RoA and RoE are anticipated at 4.2% and 21.1%, reflecting industry-leading returns.

Operational Efficiencies and Strategic Growth Drivers

Strategic Pursuit of Efficiency: Operating expenses as a percentage of AUM are expected to decline further, reaching 3.44% by FY27 due to investments in digital and AI infrastructure.
Technological Investments: The company’s robust IT backbone and digital transformation have fortified risk controls and improved customer acquisition.
Product Diversification: Loans for consumer durables, auto, gold, and e-commerce EMI cards remain core pillars, fueling resilient demand and cross-selling opportunities.

Risk Management and Asset Quality

Measured Risk Appetite: Asset quality remains strong but modest increases in gross and net NPAs (1.3% and 0.6% by FY27) are projected as auto and MSME portfolios experience higher stress.
Proactive De-risking: Management has sharply curtailed higher-risk exposure, notably in unsecured and MSME segments, while tightening loan criteria for multi-loan clients.
Declining Credit Costs: These initiatives should drive credit costs down to 1.7% by FY27, from 1.95% in FY25, preserving overall returns.

Market Position and Peer Benchmarking

Bajaj Finance towers over NBFC peers in size, profitability, and operational resilience.

Sector Tailwinds and Structural Outlook

The overall outlook for NBFCs is positive as sector reforms, improved liquidity, and relaxation of lending norms catalyze healthy loan growth.
Industry headwinds—most acute in FY25—are expected to abate by FY26, with asset quality stress gradually receding and margin structures stabilizing.
Bajaj Finance, as a sector leader, is expected to harness these macro improvements to accelerate topline and earnings growth.

Key Risks and Caveats

Asset quality missteps in unsecured and MSME lending may impede margins if macro conditions worsen.
Escalating competition from both banks and NBFCs could compress spreads despite robust volumes.
Policy volatility and global economic shocks could challenge the outlook, requiring nimble adaptation by management.

Actionable Recommendations for Medium Term

Bajaj Finance remains the vanguard of India’s consumer finance revolution, with sector leadership, technological foresight, and financial prudence at its core.
Investors may look to accumulate the stock in declines toward Rs 980—1,000, with an aspirational target of Rs 1,150 by FY27. Prudent risk management—anchored by a stop loss at Rs 950—is advised as markets traverse a period of recalibration and fresh opportunity.
The current risk-reward is appealing for long-term exposure, but the stock requires active portfolio surveillance in light of sector risks and economic cyclicality.