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Bajaj Finance Soars: Stock Gains 5.8% Amid Bullish Outlook and Analyst Upgrades

February 20, 2025
Smart Money

Bajaj Finance Shares Surge Amid Bullish Market Sentiment

BSE Gains
Bajaj Finance’s stock price experienced a significant boost today, climbing by 5.8% in the Bombay Stock Exchange (BSE). The shares reached an impressive intraday high of ₹7,339.90, marking it as the top gainer on the Sensex index. Bajaj Finserv also followed suit, recording a substantial increase of 8.9%, with shares soaring to ₹1,717.45. The positive movement in Bajaj Finance shares coincided with the broader market’s upswing, as the Sensex made notable gains, rising over 1,000 points to trade at around the 79,520 mark by 1:00 PM.

Citi Maintains Bullish Outlook
A contributing factor to the bullish sentiment surrounding Bajaj Finance is global brokerage firm Citi, which has expressed confidence in the company’s stock. It has initiated a ’90-day catalyst watch’ for Bajaj Finance, alongside reiterating its ‘Buy’ rating with a target price set at ₹8,150 per share.

In their forecast, Citi analysts predict only a slight increase in the company’s credit costs for the third quarter, estimating this to rise to between 2.2% and 2.25%. They anticipate a 6% quarter-on-quarter and 7% year-on-year growth in Assets Under Management (AUM), bolstered by sectors including mortgages, sales financing, securities lending, and other emerging business functions. Overall, they expect a positive trend in Net Interest Margin (NIM), potentially increasing by 3-5 basis points.

Company Overview
Bajaj Finance stands out as one of India’s leading non-banking financial companies (NBFCs), with a robust portfolio that includes lending and deposit acceptance across a diverse range of clients, including retail, small and medium enterprises (SMEs), and commercial customers.

Looking at its share price history, Bajaj Finance has enjoyed steady growth, recording a 4% increase over the past month, in contrast to the Sensex, which saw a decline of 1% during the same period. Furthermore, the stock reached a 52-week high of ₹7,830 on January 9, 2024, and an all-time high of ₹8,190 on October 6, 2023. The company currently boasts a market capitalization of ₹4.4 trillion.

Financial Insights
Recent analysis indicates that Bajaj Finance is poised for a gradual alignment between earnings growth and asset growth, driven by a reduction in credit costs and greater stability in its NIMs. This optimistic outlook is particularly bolstered as the company heads into the second half of fiscal year 2025 (H2FY25).

Mirae Asset Sharehan has also chimed in with their analysis, affirming their ‘Buy’ rating on Bajaj Finance stocks following the company’s Q2 results, boosting their price target to ₹9,500. Analysts noted a promising growth trajectory, emphasizing that the underperformance seen in the stock could be corrected as market conditions improve.

For the most recent financial quarter, Bajaj Finance reported a net profit increase of 13% year-on-year (YoY) and a 2.8% quarter-on-quarter (QoQ) rise, reaching ₹4,013 crore. Meanwhile, its AUM surged by 28.8% YoY and 5.6% from the previous quarter, totaling ₹373,924 crore. The company’s net interest income (NII) also showcased strong performance, climbing 28% YoY to ₹14,987 crore.

In summary, the market is currently optimistic about Bajaj Finance, with analysts projecting consistent growth and stability in financial performance, making it a focal point for investors in the BSE.