Bajaj Finance shares fall 8% after AUM growth guidance cut but analysts retain optimism

Shares of Bajaj Finance Ltd., one of India's largest non-bank lenders, fell as much as 8% on Tuesday, November 11, as the stock will react to its September quarter results that were reported after market hours on Monday.

The management of Bajaj Finance has cut its growth guidance for Assets Under Management (AUM) for the full financial yer. It now expects AUM growth to be between 22% and 23%, compared to the earlier projection of 24% to 25%.

Bajaj Finance cut its AUM growth guidance owing to lower growth in the mortgage and SME segments. It now expects SME growth to range between 10% and 12%, while MSME growth will bottom in the first quarter of the next financial year.

Additionally, the management also expects credit costs to be at the higher end of the 1.85% to 1.95% guidance range with improvement starting the next financial year. Elevated credit costs resulted in Bajaj Finance cutting down on 25% of its unsecured MSME volumes.

On expected lines, Bajaj Finance's Net Interest Income (NII) increased by 22% from last year to ₹10,785 crore, while its Net Profit increased by 23.3% year-on-year to ₹4,948 crore.

Asset quality saw some pressure on a sequential basis with Gross NPA at 1.24% from 1.03% last quarter, while Net NPA stood at 0.6% from 0.5% last quarter. Net Interest margins remained flat compared to last year.

Brokerage firm CLSA has maintained its "outperform" stance on Bajaj Finance with a price target of ₹1,200 per share.

Morgan Stanley believes that the AUM growth guidance cut and stable NIMs may disappoint investors. It has trimmed its Earnings Per Share (EPS) estimates but sees any near-term weakness in the stock as a chance to add. The brokerage has an "overweight" rating on Bajaj Finance with a price target of ₹1,195 per share.

HSBC maintained its "buy" rating on Bajaj Finance with a revised price target of ₹1,200 per share. A pick-up in AUM growth, cost efficiencies, and normalization of Credit Costs should drive Bajaj Finance's EPS to grow at a Compounded Annual Growth Rate of 28% over financial year 2026-2028. As a result, it has also raised its financial year 2026-2028 EPS estimates and target multiples to 5.4 times financial year 2027 estimated book value per share.

Jefferies has a "buy" rating on Bajaj Finance with a price target of ₹1,270. It expects the company's net profit to see a 23% CAGR over financial year 2025-2028.

On the flip side, Bernstein has an "underperform" rating on the stock with a price target of ₹640.

"In contrast to most NBFCs & banks that reported improving asset quality this quarter, BAF saw a sharp deterioration — with almost every segment reporting higher gross & net NPA ratios despite continued growth," Bernstein said.

37 analysts have coverage on Bajaj Finance, of which 20 have a "buy" rating, 12 say "hold", while five have a "sell" rating on the stock.

Shares of Bajaj Finance are trading 7.7% lower in opening trade on Tuesday at ₹1,000.8.

Expectations of Bajaj Finance delivering a strong quarter were already built-in as the stock ended at the day's high on Monday ahead of the results announcement, gaining 1.9% to end at ₹1,086.6. The stock ended close to its 52-week high of ₹1,102.5. Shares of Bajaj Finance have gained 5% so far in the last one month.