Geojit Financial Services has reiterated its BUY recommendation for Bajaj Finance Limited, projecting a revised target price of Rs 1,138 from the current market price of Rs 1,015, suggesting a 12% upside for investors. The non-banking financial company demonstrated robust performance in Q2FY26 with consolidated total income surging 18% year-over-year to Rs. 20,181 crore, driven by diversified revenue streams across retail and commercial lending segments. Despite marginal deterioration in asset quality metrics stemming from challenges in the MSME portfolio and the strategic phasing out of captive two-wheeler and three-wheeler financing, the brokerage maintains confidence in operational efficiency improvements and prudent risk management strategies that should enhance loan loss metrics in subsequent quarters. The valuation is predicated on 5.2 times FY27E book value per share, reflecting optimism about the company's long-term growth trajectory despite near-term headwinds.
​

Geojit Reaffirms Conviction on India's NBFC Heavyweight

Geojit Financial Services has maintained its bullish stance on Bajaj Finance Limited, establishing a revised target of Rs. 1,138 per share, representing an attractive 12% appreciation potential from current levels. The research house's conviction stems from the company's demonstrated resilience in navigating a challenging operating environment while simultaneously executing strategic pivots in its loan portfolio composition. Trading at Rs. 1,015 as of December 24, 2025, the stock commands a market capitalization of Rs. 631,489 crore, positioning it among India's largest non-banking financial institutions with diversified exposure across retail, SME and commercial lending segments.
​

Exemplary Financial Performance Propels Quarterly Momentum

The financial behemoth delivered commendable results for Q2FY26, with consolidated total income expanding 18% year-over-year to Rs. 20,181 crore, substantially outpacing industry benchmarks. Interest income demonstrated robust momentum with an 18.7% YoY surge, while fees and commission income accelerated 24.8% and income from derecognized loans advanced 16.8%. Calculated net interest income witnessed substantial growth of 20.3% YoY, reaching Rs. 13,168 crore, underscoring the company's ability to effectively monetize its expanding loan portfolio. Operating efficiency metrics exhibited marked improvement as the opex-to-net total income ratio compressed to 32.6% from 33.3% in the corresponding quarter of the previous fiscal year, partially attributable to artificial intelligence implementation across operational workflows.
​
Reported profit after tax registered an impressive 23.3% YoY escalation to Rs. 4,948 crore, reflecting superior earnings quality and operational leverage. On a sequential basis, net interest income expanded 6.3% quarter-over-quarter, demonstrating sustained momentum despite challenging macroeconomic conditions.
​

Asset Quality Metrics Reflect Strategic Portfolio Recalibration

Gross non-performing asset ratios experienced marginal deterioration to 1.24% in Q2FY26 from 1.06% in the year-ago period, while net NPA ratios escalated to 0.60% from 0.46%. Management attributes this temporary setback to challenges permeating the micro, small and medium enterprise segment, compounded by the deliberate run-down of the captive two-wheeler and three-wheeler financing business, which historically contributed disproportionately to loan losses. The strategic curtailment of unsecured MSME loan volumes represents a prudent risk management initiative that is anticipated to materially improve the company's loan loss metrics throughout H2FY26 and into FY27.
​

Ambitious Growth Trajectory Tempered by Prudent Recalibration

Assets under management expanded 24% year-over-year to Rs. 462,261 crore, propelled by steady and consistent growth across diversified business segments, with the notable exception of the captive vehicle financing division currently undergoing strategic rationalization. However, management has prudently revised its full-year FY26 AUM guidance to 22-23% from the previously communicated 24-25%, acknowledging the impact of deliberate portfolio optimization initiatives. Cost of funds exhibited favorable compression to 7.52% in Q2FY26 from 7.97% in the comparable quarter of the previous fiscal year, with management projecting a range of 7.5-7.55% for the full year FY26.
​
The company's customer franchise expanded to an impressive 110.64 million, with 4.13 million new customer additions during Q2FY26 alone. Management anticipates incorporating 16-17 million new customers throughout FY26, reflecting sustained customer acquisition momentum. New loans booked surged 26% to 1.21 crore in Q2FY26 from 0.97 crore in the corresponding quarter of the previous year, demonstrating robust demand dynamics across lending categories.
​

Technology Integration and Operational Excellence Drive Efficiency

The NBFC is aggressively implementing its 'FINAI' initiatives designed to automate processes and substantially enhance operational efficiency across the organization. These transformative technology interventions are projected to yield tangible cost rationalization and productivity benefits within a 12-18 month timeframe, positioning the company advantageously for sustained margin expansion. The recent GST rate revision has catalyzed improved customer sentiment, translating into heightened consumption patterns and a strengthened seasonal outlook for the company's lending products.
​

Valuation Framework and Investment Rationale

Geojit's revised target price of Rs. 1,138 is predicated on 5.2 times FY27E book value per share, reflecting confidence in the company's ability to navigate near-term challenges while capitalizing on India's expanding consumer finance opportunity. The brokerage projects net interest income of Rs. 44,262 crore for FY26E and Rs. 49,964 crore for FY27E, representing growth rates of 19.7% and 12.9% respectively. Net profit is forecasted to reach Rs. 19,526 crore in FY26E and Rs. 24,228 crore in FY27E, translating to adjusted earnings per share of Rs. 31.4 and Rs. 38.9.
​

Management expects the credit cost for FY26 to stabilize within the 1.85-1.95% range, while net interest margins are projected at 9.3% for FY26E, moderating to 8.9% for FY27E. The strategic rationalization of the captive two-wheeler and three-wheeler financing business, which accounts for a disproportionate share of loan losses, should yield material improvements in asset quality metrics throughout H2FY26 and FY27. With a 52-week trading range of Rs. 678 to Rs. 1,102, the stock has delivered absolute returns of 41.4% over the trailing 12-month period, substantially outperforming the Sensex's 5.4% gain during the same timeframe.