Mirae Asset Sharekhan has reiterated its BUY recommendation on Bajaj Finance Limited (BAJFINANCE), projecting a revised target price of Rs 1,000 as the company continues to outpace expectations despite macro headwinds. In the most recent quarterly disclosure, Bajaj Finance demonstrated robust profit growth, maintained operational discipline, and announced cautious expansion into FY26 on the back of strong management execution.

Sharekhan Remains Positive on Bajaj Finance

Bajaj Finance has again confounded the Street, clocking strong earnings and asset growth for the quarter. Mirae Asset Sharekhan reaffirms its BUY call, setting a price target of Rs1,000. Amid sectoral tremors—escalating stress in MSME and auto segments, and increased regulatory scrutiny—Bajaj Finance’s diversified portfolio, steady margins, and shrewd cost management have driven results above expectations. Investors should note management’s warning around asset quality, but also take confidence from the firm’s plan to mitigate risks. The stock currently trades at 4.6x FY26 BV and offers ample upside from current levels.

Recommendation Highlights:
Mirae Asset Sharekhan maintains its ‘BUY’ stance on Bajaj Finance, with a revised price target—now Rs1,000—reflecting confidence in sustained outperformance and one of the strongest managerial track records in the financial services sector.

Stock Levels:

CMP (Current Market Price): Rs880

Target Price: Rs1,000

52-Week Range: Rs979 / Rs643

Market Cap: Rs547,000cr

Financial Results: Another Earnings Beat, Yet Caution Persists

Net Profit Surges:
The company’s Q1FY26 net profit soared to Rs4,765cr, beating estimates by 2.8%. This marks a 21.8% growth year-over-year and 4.8% quarter-over-quarter, buoyed by strong AUM expansion and contained operating expenses.

NII & NIM Trends:
Net Interest Income reached Rs10,227cr, up 22.3% y-o-y. NIM (Net Interest Margin) compressed slightly to 9.27%, down 18bps y-o-y due to a dip in yields, though management expects a 10bps margin improvement by fiscal year-end on lower cost of funds.

Robust AUM Growth:
Assets under management rose 24.6% y-o-y to Rs441,450cr as Bajaj Finance continued to scale its franchise, excluding the ailing two-wheeler and MSME lending segments.

Operational Metrics: Efficiency in a Challenging Environment

Cost Management:
Annualized operating expense to AUM improved, dipping to 3.74% compared to 3.92% a year ago, reflecting strong cost discipline amidst aggressive expansion.

Credit Costs & Asset Quality Under Watch:
Quarterly credit costs stayed high at 1.92%, up y-o-y owing to stress in the 2- and 3-wheeler and MSME segments. The company aims to keep FY26 credit cost within the 1.85-1.95% range. Asset quality metrics, specifically GS-3 and NS-3 ratios, saw minor deterioration reflective of these pockets of stress.

Loan Book Trajectory:
13.49mn new loans booked in Q1, up 23% y-o-y, with customer additions totaling 4.69mn. Management expects to disburse over 50mn new loans in FY26, with an aim to add 14-16mn customers.

Strategic Initiatives: De-risking and Portfolio Realignment

Scaling Back in Vulnerable Segments:
Management has initiated an orderly wind-down of its two- and three-wheeler financing business, and is actively reducing MSME exposure. These steps are designed to mitigate rising risks and protect overall asset quality.

Fee Income & Digital Push:
Fee income grew by a sturdy 13-15%, benefiting from enhanced product penetration and digital onboarding.

Valuation & Peer Comparison

Bajaj Finance trades at a premium justified by consistently superior return ratios and growth metrics among major listed NBFCs.

Risks: Take Note as an Investor

Asset Quality Risks:
Persistently high credit costs and rising non-performing assets (GS-3 and NS-3 ratios) in unsecured lending, MSME, and vehicle segments warrant vigilance. Management’s decisive curtailment of exposure in these segments is a prudent step.

Competitive Pressures & Regulatory Overhang:
Rising competition in retail and mortgage lending, alongside evolving regulatory norms—particularly concerning risk weights—will add volatility.

Sector & Company Outlook: Building for the Future

NBFC Landscape:
The NBFC sector in India is emerging from a tough FY25, squeezed by margin compression and regulatory headwinds. Leaders like Bajaj Finance are better placed to benefit as liquidity stabilizes, risk weights are relaxed, and digital innovation powers inclusion.

Bajaj Finance Advantage:
A dominant consumer lender with a diversified portfolio and best-in-class tech stack, Bajaj Finance is positioned to capture sector recovery and longer-term growth. Management expects 24-25% AUM growth in FY26, stable NIMs, and manageable credit cost peaks, underlining ongoing franchise strength.

Final Word: Why Bajaj Finance Remains a Standout BUY

Mirae Asset Sharekhan's thesis is anchored on Bajaj Finance’s exceptional execution capability, prudent risk management, and rapid digital adoption. Investors should view the cautious commentary on asset quality as a mark of transparency, not a red flag. At a current market price of Rs880 and poised for a target of Rs1,000, the stock presents investors with compelling upside potential—backed by one of the highest return on equity profiles in the sector. Key levels to watch:

Support: Rs800

Current Price: Rs880

Target: Rs1,000

Resistance: Rs979

Continue to monitor developments in MSME asset quality and macro trends, but Bajaj Finance remains at the vanguard of India’s NBFC growth story.