The average analyst price targets on Bajaj Finance after the fourth quarter results stood at ₹8,477 implying an upside of 20.6% over Friday’s closing.
Analysts said that the non-banking financial company’s (NBFCs) earnings are expected to be adversely impacted due to pressure on NIM, sticky costs, and higher credit costs.
Analysts at HSBC said that the NBFC remains firmly in the earnings cut cycle at rich valuations of 21 times FY26 Price-to-Earnings valuations.
“As the stock remains in earnings cut cycle, it will be difficult to find re-rating triggers, but it could compound still,” said analysts Abhishek Murarka, Rahil Shah and Gaurav Sharma in a note.
However, Bajaj Finance can avail funding at competitive costs and could gain market share compared to its peers, they said.Nomura said Bajaj Finance reported a ‘not-so-rosy quarter’ and the outlook remains weak in the near term. While the management expects the cost of funds to peak by July-August 2024 and the regulatory ban on its two products ‘eCOM’ and ‘lnsta EMI Card’ to be lifted in FY25, the earnings would remain under pressure.”The trends/ FY25 expectations for BAF are in-line with our thesis that FY25F would be a reset year for the entire NBFC space with growth/profitability moderation,” said analysts at Nomura.