Why did investors dump Bajaj Finance shares post Q4 results? Stock tanks 6%

Bajaj Finance shares: Bajaj Finance stock has "limited catalysts" for any meaningful upside in the stock in the near-term, said analysts

Bajaj Finance share price today: Moderation in the asset growth guidance for the current financial year of 2025-26 (FY26) did not go down well with Bajaj Finance investors, who pressed the sell button, sending the shares 5.8 per cent lower on the BSE on Wednesday, April 30. They hit an intraday low of ₹8,560 per share.

 

At 9:55 AM, Bajaj Finance share price was quoting at ₹8,668 per share, down 4.6 per cent, as against a 0.15-per cent rise in the benchmark BSE Sensex index.

 

According to analysts, moderation in asset under management (AUM) growth and return on equity (RoE) guidance for FY26, despite a decline in projected credit costs and steady margins, does not bode well for Bajaj Finance stock.

 

 

"Moderation in growth guidance was a major negative from Bajaj Finance’s Q4 results. Though we like BAF for its ability to navigate across cycles, the revised growth guidance makes the stock’s current valuation look rich and provide limited upside in near-term," noted analysts at JM Financial Institutional Securities.

 

On Tuesday, Bajaj Finance revised the AUM growth guidance to around 24-25 per cent for FY26, compared to 25-27 per cent projected earlier, while announcing the March 2025 quarter (Q4FY25) results. It also lowered the RoE guidance to 19-20 per cent vs 21-23 per cent earlier.

 

This downward revision came despite the non-bank finance company (NBFC) anticipating stable net interest margin (NIM), ease in cost of finance by 10-15 basis points, and improvement in cost to income (C/I) ratio by 40-50 bps in FY26.

 

It, however, guided for a lower fee income growth of 13-15 per cent and credit costs in the range of 1.85-1.95 per cent.

 

Analysts at Motilal Oswal Financial Services opine that Bajaj Finance stock has "limited catalysts" for any meaningful upside in the near-term as the stock trades at rich valuations of 4.1-times FY27E.

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"Our FY26 and FY27 net profit estimates remain broadly unchanged, and we believe that the credit costs have now peaked and will remain below the upper end of the guided range. We estimate a CAGR of around 25 per cent each for AUM and PAT over FY25-FY27, and expect Bajaj Finance to deliver an RoA of 4.1 per cent and a RoE of 21 per cent in FY27," the brokerage said.

 

However, given the lack of near-term re-rating triggers, the brokerage has retained its 'Neutral' rating on the stock with a share price target of ₹10,000, based on 4.5-times March, 2027, estimated book value per share (BVPS). 

 

Bajaj Finance: Outlook divided

 

Meanwhile, Bajaj Finance reported a net profit of ₹ 4,546 crore in Q4FY25, up 19 per cent year-on-year (Y-o-Y) and 6 per cent quarter-on-quarter (Q-o-Q). Its net interest income (NII) climbed 22 per cent Y-o-Y/5 per cent Q-o-Q to ₹9,807 crore, while NIM compressed 10bps to Q-o-Q to 9.6 per cent. It announced a stock split in 1:1 ratio and bonus issue in 4:1 ratio.

 

The NBFC's total customer franchise rose to 101.8 million in the recently concluded quarter, growing 22 per cent Y-o-Y and 5 per cent Q-o-Q with new customer acquisitions at 4.7 million during the quarter. 

New loans booked were up 23 per cent Y-o-Y to 10.7 million (vs 8.7 million in Q4FY24), taking the total AUM to ₹4.17 trillion, up 26 per cent Y-o-Y and 5 per cent Q-o-Q.

 

Analysts at Kotak Institutional Equities have raised earnings estimates by 1.6-3.4 per cent over FY26 and FY27, to reflect marginally higher (25-26 per cent) loan growth, lower expenses, and tweaking of credit costs. It has a 'Add' rating (target: ₹9,500).

 

Emkay Global Financial Services, on the other hand, has cut earnings estimates by 2-3 per cent over the same period, accounting for minor cuts in NIM and fee income, unchanged opex, and minor increase in credit costs. It, too, has a 'Add' rating (target: ₹9,200).