Bajaj Finance Shares Hit Fresh 52-Week High on 29% Q1 Profit Jump, Brokerages Turn Bullish

Bajaj Finance Stock Surges 6% to Record High on Strong Q1 Results

Bajaj Finance's shares jumped over 6% on Friday to a fresh 52-week high of ₹1,122.30 after the non-bank lender reported a 29% year-on-year rise in standalone net profit to ₹5,345.50 crore for the June quarter of fiscal 2027.

The strong earnings beat, driven by broad-based assets under management (AUM) growth of 24%, stable net interest margins and lower credit costs, prompted several brokerages to turn more positive. Motilal Oswal upgraded the stock to "buy" with a target of ₹1,300, while CLSA, HSBC and Nomura raised their price targets to ₹1,300, ₹1,270 and ₹1,140 respectively, all maintaining bullish ratings.

However, global brokerage Bernstein bucked the trend, sticking to its "underperform" rating with a target of just ₹840 per share. While Bernstein acknowledged the healthy AUM growth, improving asset quality—gross non-performing assets fell to 0.96%—and a solid return on assets of 4.7%, it argued that upside appears limited at current valuations.

Management indicated it will monitor credit trends for another quarter before considering any revision to guidance and expects borrowing costs to face only a modest upward bias, providing near-term visibility on margins.

Why Brokerages Are Betting on Bajaj Finance's Recovery and Where Bernstein Sees Risk

The Bull Case: Near-Flawless Execution

Analysts at Motilal Oswal, CLSA, HSBC and Nomura highlighted the all-round strength of the quarter. Profit after tax beat estimates by 6%, supported by higher-than-expected net interest income, pre-provision operating profit and lower credit costs of 1.54%. Growth was broad-based across consumer and SME lending segments, while asset quality metrics continued to improve, with gross NPAs at 0.96% and strong vintage performance suggesting the worst of the pandemic-era stress is behind the company.

CLSA described Bajaj Finance as having once again proved its “Iron Man” status, with the earnings beat and improved trajectory prompting them to raise their target to ₹1,300. HSBC raised its earnings estimates by 1-6% for FY27-29 after factoring in stronger AUM growth, better net interest margins and lower credit costs. Nomura noted that while management remains cautious, any eventual positive guidance revision could add further momentum.

Bernstein’s Lone Dissent: The Valuation Question

Despite acknowledging the same positive operational numbers, Bernstein maintains that Bajaj Finance’s current stock price already reflects the strong recovery. With the stock trading at a record high and even the most bullish target price of ₹1,300 offering only around 15% upside from Friday’s peak, the risk-reward appears unfavorable under their model. The brokerage’s ₹840 target implies a potential downside of nearly 25%, suggesting that even a robust quarter may not be enough to justify a higher multiple if credit growth or margins face headwinds in coming quarters.

What Investors Should Watch After Bajaj Finance's Record Rally

• Near-term earnings forecast hinge on credit trends: Management’s decision to wait one more quarter before revising guidance keeps the focus on upcoming asset quality data. Any upward revision to AUM growth or credit cost estimates could trigger a fresh rally.
• Valuation-check is critical after the surge: With the stock at ₹1,122.30, it already trades above HDFC Securities’ ₹1,100 target and near the top of the consensus range. Bernstein’s ₹840 target serves as a reminder that even strong earnings can be priced in, leaving limited room for error.
• Stable funding costs and margins remain a buffer: The company’s expectation of only a modest upward bias in borrowing costs provides a near-term floor for net interest margins, but any sharp rise in market interest rates or competition for deposits could erode that advantage.