Bajaj Finance shares: Why stock fell 20% in a month; valuation not compelling, says MOFSL

MOFSL on Tuesday said Bajaj Finance Ltd has corrected sharply over the past one month but it believes the prevailing valuations are fair but not particularly compelling in the context of near-term uncertainties. It reiterated its 'Neutral' rating on the stock with a target price of Rs 900, based on 3.6 times December 2027 book value per share. The target suggests 11 per cent potential upside ahead.

The domestic brokerage said Bajaj Finance, which is down 20 per cent in the past one month, is transitioning into a more mature phase of growth, characterised by tighter risk controls, moderated expansion in select segments, and a sharp pivot toward technology and customer monetization. This will enhance long-term earnings visibility and reduce cyclicality, it said.

"BAF’s growth moderation reflects a strategic recalibration, not demand constraints evidenced by deliberate tightening in MSME and the run-down of lower-quality captive 2W/3W portfolios. AUM growth of 22-23 per cent in FY26 is a reset year, setting the base for a more durable growth trajectory. MSME growth, currently subdued, is expected to rebound to 20 per cent-plus after 2-3 quarters, contingent on sustained improvement in early delinquency trends," it said.

Secured segments particularly gold loans and new car finance are emerging as key growth anchors, offering better risk-adjusted returns. Cross-sell remains the most powerful structural lever, with the company shifting from acquisition-heavy (60:40) to engagement-led (40:60) growth, driving higher wallet share.

MOFSL said Bajaj Finance continued to operate with a relatively low market share across most lending segments (gold loans 1 per cent, new car financing 1 per cent, used car financing 5 per cent, secured business loans + LAP 1 per cent, and unsecured MSME and two-wheeler financing 4 per cent each). With market share across segments still in the low single digits, Bajaj Finance retains significant headroom to scale without stretching risk, it said.

"BAF remains focused on calibrated expansion, with new businesses being scaled up only where there is clear visibility on sustainable unit economics and risk-adjusted returns. We build in 23 per cent AUM CAGR over FY26–FY28E, supported by segment recovery, cross-sell intensity, and customer base expansion," MOFSL said.