Target: ₹1,200
CMP: ₹964.70
Bajaj Finance reported Q3-FY26 PAT of ₹4,000 crore, down 6 per cent year on year, impacted by accelerated provisioning following the implementation of a minimum LGD floor across asset stages and one-time employee expenses of ₹270 crore relating to labor code. The company sold about 2 per cent stake in Bajaj Housing Finance, resulting in a one-time gain of ₹1,420 crore.
Assets under management expanded 22 per cent to ₹4.8 lakh crore, driven by broad-based traction across mortgages, consumer B2C, gold loans, securities lending, urban sales finance, commercial lending and rural sales finance segments. . The management reiterated its 20 per cent growth guidance across businesses. The gold loan portfolio is expected to move in line with gold prices.
Gross stage-3 (GS-3) assets, which declined 2 bps on quarter, rose 9 bps to 1.21 per cent because of elevated stress in the SME sector.
We appreciate BAF’s proactive approach, although believe that the stricter ECL norms will delay RoE expansion slightly to about 22 per cent by FY28F. We expect other business segments to drive growth, with the ramp-up of B2C lending, sales finance, gold lending and vehicle finance segments. Any correction in stock price sweetens the risk-reward ratio. We maintain our high-conviction Add rating on BAF with a lower target price of ₹1,200 (₹1,250 earlier).
Downside risks: Slowing consumption and higher delinquency.
Published on February 5, 2026