Bajaj Finserv and Bajaj Finance soar on rating upgrades

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January 03, 2025

Bajaj Finserv and Bajaj Finance soar on rating upgrades

Mumbai: Bajaj Finserv and its subsidiary Bajaj Finance were among the top gainers in Thursday's trading after Kotak Institutional Equities reinitiated coverage on the stocks citing strong business prospects.Bajaj Finserv surged 7.9%, with the brokerage rating the stock a 'buy' with a price target of ₹1,930. This implies an upside of 13.6% over Thursday's closing price of ₹1,700."Strong expansion across business lines with moderate-to-high margins and a focus on profitability are long-term value drivers. The new business lines will likely generate value over time," said Kotak in a client note.Kotak rated Bajaj Finance an 'add' with a price target of ₹8,000, suggesting gains of 8.3% over Thursday's closing level of ₹7,387. The stock jumped 6.5%."We expect Bajaj Finance to deliver 25%+ loan book growth over the next three years, with the near-term being marred by asset quality challenges, mostly in the unsecured book," it said.Separately, brokerage Citi put the stock on its "90-day positive catalyst watch" with a price target of ₹8,150 in the run-up to the December quarter earnings announcement this month. The firm expects loan growth stability, positive bias in Net Interest Margin (NIM), and a marginal rise in credit cost in the results.Citi said an update on Bajaj Finance managing director Rajeev Jain's much-speculated transition will be critical with "our assessment leaning more towards the executive role of Rajeev Jain at BAF/Bajaj Group level."Bajaj Finserv and Bajaj Finance have been underperformers over the past year with returns from shares of both companies remaining almost flat in the period. The rebound on Thursday helped both the shares erase the losses.Kotak initiated coverage on Bajaj Housing Finance, a unit of Bajaj Finance, with a sell rating and a price target of ₹100. The stock fell 0.6% to close at ₹126.45."Intense competition and low spreads in prime housing cap medium-term RoE (Return on Equity) to mid-teen levels," it said.