Buy Bajaj Finance: Sharekhan Sets a Target of ₹10,500 Amid Strong Fundamentals
Bajaj Finance, a leader in India’s non-banking financial sector, has received a bullish recommendation from Sharekhan, with an upgraded price target of ₹10,500. The research report highlights the company’s strong fundamentals, leadership continuity, and long-term growth potential. With the stock currently trading at ₹9,080, this presents a promising upside for investors.
Leadership Stability Boosts Investor Confidence
A key highlight of Sharekhan’s report is the recent leadership transition within the Finance. Mr. Rajeev Jain, the long-serving Managing Director (MD), has been promoted to Vice Chairman for a three-year term, while Mr. Anup Saha, previously the Deputy MD, has been elevated to MD for the same duration. This smooth transition ensures continuity in strategic direction, reinforcing investor confidence.
the finance has consistently demonstrated robust financial performance, and the leadership reshuffle is expected to maintain the company’s trajectory of success. The management’s ability to execute long-term growth strategies, backed by a well-established customer base and innovative financial products, strengthens its position in the market.
Why Sharekhan Recommends Buying Bajaj Finance
Sharekhan’s “Buy” recommendation is based on the company’s resilient core fundamentals. Despite macroeconomic challenges, Bajaj Finance has maintained steady growth in assets under management (AUM), profitability, and return ratios.
At its current market price (CMP) of ₹9,080, Bajaj Finance is trading at 4.7x and 4.0x of its estimated book value for FY2026E and FY2027E, respectively. This valuation suggests a significant growth potential in the coming years.
Financial Strength and Key Ratios
To understand Bajaj Finance’s strength, let’s look at some key financial metrics:
| Metric | Value |
|---|---|
| Market Cap | ₹5,62,853 Cr. |
| Current Price | ₹9,080 |
| 52-Week High / Low | ₹9,177 / ₹6,376 |
| Stock P/E | 35.2 |
| Book Value | ₹1,402 |
| Dividend Yield | 0.39% |
| ROCE (Return on Capital Employed) | 11.9% |
| ROE (Return on Equity) | 22.1% |
| Face Value | ₹2.00 |
| Promoter Holding | 54.7% |
| Price to Book Value | 6.48 |
| Debt to Equity Ratio | 3.74 |
| Pledged Shares | 0.00% |
| Industry P/E | 20.3 |
| Graham Number | ₹2,854 |
| Intrinsic Value | ₹4,815 |
| RSI (Relative Strength Index) | 68.2 |
| EPS (Earnings Per Share) | ₹258 |
| PEG Ratio | 1.20 |
| 200-Day Moving Average (DMA) | ₹7,470 |
| Free Cash Flow (3 Years) | ₹-1,54,434 Cr. |
| Free Cash Flow (5 Years) | ₹-1,80,452 Cr. |
| Debt | ₹3,24,218 Cr. |
| Return on Assets (ROA) | 4.44% |
| Price to Sales Ratio | 8.51 |
Growth Drivers for Bajaj Finance
- Expanding Customer Base: Bajaj Finance has a strong retail footprint, continuously expanding its loan portfolio across multiple categories, including personal loans, business loans, and consumer durable financing.
- Tech-Driven Approach: The company has invested significantly in digital transformation, enhancing customer experience and operational efficiency.
- Robust Asset Quality: Despite economic fluctuations, Bajaj Finance has maintained healthy asset quality, ensuring strong returns for investors.
- Strong Return Ratios: With an ROE of 22.1% and an ROCE of 11.9%, the company continues to generate high returns on invested capital.
Risk Factors to Consider
While Bajaj Finance remains a strong player in the NBFC sector, investors should be aware of potential risks:
- Interest Rate Sensitivity: Rising interest rates could impact borrowing costs and profitability.
- Regulatory Challenges: Any adverse regulatory changes may affect business operations.
- High Valuation Concerns: Trading at a P/E of 35.2, some investors may find the stock expensive relative to industry peers.
Conclusion: Should You Invest?
With a target price of ₹10,500, Bajaj Finance presents a strong investment opportunity. Its stable leadership, expanding financial portfolio, and robust fundamentals make it a compelling buy for long-term investors. However, investors should assess their risk appetite before making a decision.
FAQs on Bajaj Finance Investment
1. Why is Sharekhan recommending a Buy on Bajaj Finance?
Sharekhan believes that Bajaj Finance’s strong fundamentals, leadership stability, and growth trajectory support a long-term positive outlook. The stock is expected to reach ₹10,500 based on its valuation metrics and future growth potential.
2. What is the latest target price for Bajaj Finance?
The latest target price set by Sharekhan for Bajaj Finance is ₹10,500.
3. How has the leadership change affected Bajaj Finance?
The transition of Rajeev Jain to Vice Chairman and Anup Saha to MD has been smooth, ensuring leadership continuity and reinforcing investor confidence.
4. What are the key financial metrics of Bajaj Finance?
Some key metrics include an ROE of 22.1%, a debt-to-equity ratio of 3.74, and a market capitalization of ₹5,62,853 Cr.
5. What risks should investors consider?
Investors should be cautious about interest rate hikes, regulatory changes, and the high valuation of the stock compared to peers.
6. Is Bajaj Finance a good long-term investment?
Yes, given its strong growth prospects, expanding customer base, and robust financials, Bajaj Finance remains a solid long-term investment option.
For more market insights, follow our news.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like MoneyControl, ET, NSE India.
Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.