Bajaj Finance Share Price Rally: A Detailed Analysis of Recent Performance and Future Outlook
Bajaj Finance's share price has been experiencing robust buying interest recently, fueled by December quarter results that met market expectations and a general uplift in domestic market sentiment. After enduring losses for three consecutive months, the stock has rebounded impressively, gaining approximately 8% in February alone. Over the past year, Bajaj Finance shares have surged more than 21%, reaching a 52-week peak of ₹1,102.45 on October 23 and touching a low of ₹802.72 on February 12 of the previous year.
Corporate Actions and Historical Performance
On June 16 last year, Bajaj Finance executed a significant 1:2 stock split, effectively increasing the number of shares outstanding. Concurrently, the company announced a bonus issue, generously rewarding shareholders with four additional shares for every single share held. These corporate actions have contributed to the stock's liquidity and investor appeal, setting the stage for its recent upward trajectory.
Quarterly Financial Results: Mixed Signals Amid Growth
In the third quarter of FY26, Bajaj Finance reported a consolidated net profit decline of 5.6% year-over-year, settling at ₹4,066 crore. This dip was primarily attributed to elevated provisions, including an accelerated expected credit loss (ECL) charge of ₹1,406 crore and a one-time gratuity-related expense of ₹265 crore stemming from new labour codes. Despite this, the company showcased resilience with its net interest income (NII) climbing nearly 21% to ₹11,318 crore during the same period, underscoring robust core operational performance.
Brokerage Perspectives and Investment Recommendations
PL Capital's Optimistic Stance
Following the Q3 results, brokerage firm PL Capital reaffirmed its 'buy' rating on Bajaj Finance, setting a target price of ₹1,125. The firm anticipates that the net interest margin (NIM) for FY26 will remain stable, supported by a reduced cost of borrowing. PL Capital has projected a higher credit cost of 2.2% for FY26E due to accelerated provisions in the first nine months, but expects a moderation to 1.8% and 1.7% in FY27 and FY28E, respectively, as stress in the MSME segment eases and the portfolio's share of captive two-wheeler and three-wheeler financing diminishes.
BNP Paribas India's Top Pick Status
BNP Paribas India continues to list Bajaj Finance among its preferred NBFC selections, with a target price of ₹1,250. The brokerage does not foresee any substantial erosion in the company's earnings power, which boasts a healthy 6% pretax return on assets (ROA). Trading at nearly 25 times the FY27E price-to-earnings ratio, Bajaj Finance remains BNP Paribas's top NBFC choice. The firm's outperform rating is bolstered by expectations of normalized credit costs, improved margins, and a decline in borrowing costs, all of which are projected to drive FY27E earnings per share growth.
Technical Analysis: Charting the Path Forward
According to Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, Bajaj Finance has recently broken out above the 50-day exponential moving average (DEMA) on the daily chart after a brief consolidation phase. This breakout suggests a potential resumption of upward momentum. Additionally, the Relative Strength Index (RSI) has breached its falling trendline, indicating strengthening bullish sentiment.
Patel advises that based on the current technical setup, investors might consider entering a buy position above ₹988 on a closing basis, with a target price of ₹1,040 and a stop loss set at ₹970. This analysis provides a tactical framework for those looking to capitalize on short-term price movements.
Investment Strategy: To Buy or Book Profits?
With Bajaj Finance delivering strong gains in the short term, the market is abuzz with speculation regarding whether investors should purchase shares at current levels or consider locking in profits. The contrasting views from brokerages and technical indicators present a nuanced picture. While PL Capital and BNP Paribas advocate for buying, citing stable margins and growth prospects, the technical chart signals offer entry points for tactical trades. Investors are encouraged to weigh these factors against their individual risk tolerance and investment horizons.
Disclaimer: This article is intended for educational purposes only. The views and recommendations expressed herein are those of individual analysts or broking firms and do not reflect the opinions of any news organization. Investors are strongly advised to consult with certified financial experts before making any investment decisions, as market conditions are subject to rapid changes and individual circumstances may vary significantly.
