Bajaj Finance share price target: Nirmal Bang says 'Hold', limited upside ahead

Nirmal Bang Institutional Equities has maintained its 'Hold' rating on Bajaj Finance, following an evaluation of the company's Q1FY26 performance. The brokerage has set a target price of Rs 978, citing stable net interest margins (NIMs) and strong asset growth as key factors.The target suggests a 2 per cent upside potential over Thursday's closing price of Rs 959 apiece on BSE.

Bajaj Finance's June quarter net interest income ( NII ) grew at 22 per cent, pre-provision operating profit (PPOP) at 18 per cent and profit after tax (PAT) at 21 per cent. Nirmal Bang expects net interest margin (NIM) for Bajaj Finance to remain stable throughout FY26, with potential for marginal improvement in FY27, based on a forecast of better cost of funds due to reduced dependency on deposits. This outlook is crucial for investors considering long-term growth.

Nirmal Bang also increased its FY27 estimates for Bajaj Finance by factoring in lower cost of funds and controlled operating expenses. These adjustments were incorporated into the valuation, arriving at the target price using a multiple of 4x Jun-27E adjusted book value.

In Q1FY26, Bajaj Finance witnessed a robust annualised growth in assets under management (AUM) of 25 per cent, driven by the addition of 4.7 million new customers and 13.5 million new loans. However, Nirmal Bang cautions investors about near-term challenges that could impact performance.

Meanwhile, Bajaj Finance's asset quality remains a significant focus. "Asset quality with GS3/NS3 at 1.28  per cent and 0.5 per cent, respectively, remained the lowest in the industry," signifying a strong position compared to peers and underscoring the company's competitive edge.

In terms of leadership, Rajiv Jain has returned to an operating role following the exit of Anup Saha and will continue in this capacity until FY28. The board has also requested a detailed succession plan to ensure continuity.

Additionally, the company has taken significant credit actions concerning its two- and three-wheeler (2-3W) and MSME businesses to manage credit costs and AUM growth in these segments.

Looking ahead, a key priority for Bajaj Finance will be mitigating leverage in consumer loans, highlighting an area of concern acknowledged by management. The company aims to stabilise its various business segments while executing strategic initiatives to optimise cost efficiencies.