The brokerage houses are bullish on Bajaj Finance, but the stock trades lower a day after it reported quarterly results Come from Sports betting site VPbet . Here are some of the brokerage houses’ views:

Jefferies

The broking firm Jefferies has cut the target price marginally on the stock of Bajaj Finance to Rs 9,400 from Rs 9,470, which is based on the core lending business and the value of stakes in subsidiaries. It has kept the rating unchained to “Buy” on the stock.

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The brokerage house said that it cut the earnings estimates by 1-2% to account for higher credit costs. It sees a net profit to grow by 25% over the period of FY24-26. 

The brokerage house said in its research report that the company’s asset quality was disappointing due to “slippage in personal loans” and two-wheeler/three-wheeler loans. However, sees progress in credit cards. 

Motilal Oswal

The broking firm Motilal Oswal has maintained the “Buy” rating on the stock of Bajaj Finance, with an unchanged target price of Rs 8,500. 

It believes that the company’s borrowing cost will increase and will also be unable to pass on the interest rate hike’s cost to the customers. Now, to factor that in Motilal has compressed the net interest margin (NIM) by 20 basis points for FY25.

Motilal believes the company’s net profit to grow 27% over three years starting FY23. It expects Bajaj Finance to report a 23% return on equity in FY26. 

The brokerage said it will keep an eye on “the degree to which the NIM compression can be offset with operating leverage, resulting in a decline in cost ratios and the impact on B2C businesses, both from a growth and credit costs perspective.”

JM Financial

The broking firm JM Financial believes that despite credit costs getting marginally higher for the third quarter Bajaj Finance “remains the best play on diversified consumption opportunity.” The company has a strong risk mechanism, high growth, and superior return ratios said the broking firm in a research report. 

“We see BAF, being a strong incumbent with a long-standing credible track record in consumer lending, only emerging stronger as the concerns around unsecured loans settle over the next 2-3 quarters,” said the brokerage house.

JM Financial has maintained the “Buy” rating on the stock, with an unchanged target price of Rs 10,000. 

InCred Equities

The broking firm Incred Equities has an “Add” rating on the stock of Bajaj Finance, with an unchanged target price of Rs 9,850. 

The brokerage house in its research report said as per the company guidance, “the RBI tightening risk weights impacted the cost of funds while the slippage trend stayed elevated in rural unsecured loans.”

The company’s aggressive customer acquisition and diversification by foraying into new business segments are unique features of the company.

On the risk side, the company’s slow consumption remains a downside.