1 week ago
Nomura raises Bajaj Finance target despite regulatory, competition risks
Nomura is a brokerage that studies companies and estimates what their shares may be worth.
It raised its expected price for Bajaj Finance shares to Rs 1,270.
That suggests the shares could rise about 18% from the level mentioned in the article.
Bajaj Finance has grown strongly over the past six months.
However, the company faces uncertainty about proposed Reserve Bank of India rules for revolving credit.
It also faces strong competition from other lenders and fintech companies that offer personal loans.
Growth in urban personal loans has slowed to below 20% since the third quarter of FY26.
Nomura believes gold loans and improving MSME loans could help the company grow later.
The brokerage therefore remains positive overall but expects some near-term pressure.
Nomura raised its Bajaj Finance target price to Rs 1,270, implying about 18% upside.
Bajaj Finance shares were trading 0.12% lower at Rs 1,093.70 on Friday but had gained 32% over six months.
Nomura said regulatory uncertainty around revolving credit and intense personal-loan competition could restrain growth.
The brokerage raised its FY27 AUM growth estimate to 25% and cut credit-cost assumptions by 4-11 basis points through FY29.
Nomura expects gold-loan expansion and an MSME-loan recovery to support 24-26% AUM growth in FY27's closing quarter.
- Who
- Bajaj Finance and Nomura.
- What
- Nomura raised its Bajaj Finance target price to Rs 1,270 while highlighting regulatory and competitive risks.
- Where
- The report concerns Bajaj Finance's lending operations in urban and rural markets.
- When
- The shares were discussed on Friday; the forecasts cover FY27 through FY29.
- Why
- Nomura raised its estimates because of expected AUM growth, lower credit costs, gold-loan expansion and an MSME-loan recovery.
Upside case
Risk case
Future growth
Upside case
Nomura expects gold-loan expansion and a recovery in MSME loans to help deliver 24-26% year-on-year AUM growth in the closing quarter of FY27.
Risk case
Consolidated AUM growth could remain subdued in the second quarter of FY27 because of regulations affecting flexi loans and continued competition.
Personal-loan business
Upside case
Bajaj Finance has a personal-loan book equal to the combined books of the next nine NBFCs, giving it substantial scale.
Risk case
Other NBFCs and fintech platforms have been scaling rapidly, while Bajaj Finance's urban personal-loan growth slowed to below 20% from the third quarter of FY26.
Regulatory outlook
Upside case
Nomura said clearer final definitions could reduce uncertainty around the draft rules on revolving credit.
Risk case
The draft Reserve Bank of India document leaves the definition of revolving credit open to interpretation, creating a regulatory overhang.
Key facts
- Share price
- Rs 1,093.70, down 0.12% on Friday
- Six-month performance
- The stock was up 32%
- Nomura target
- Rs 1,270, implying about 18% upside
- FY27 AUM estimate
- Raised to 25% year-on-year growth
- Profit estimates
- Raised by 3% across FY27-FY29
- Credit-cost assumptions
- Lowered by 4-11 basis points across FY27-FY29
- Valuation
- The revised target implies price-to-book and price-to-earnings multiples of 4.2 times and 21.9 times, respectively, as of September 2028
Sources
Related news
Bajaj Finance shares plunge 6% after RBI draft norms
Jefferies backs four NBFC stocks amid growth and rural risks
Mirae Asset Sharekhan Recommends 11 BFSI Stocks
MOFSL Names Four NBFC Stocks After Sector Rerating
Gold Loan Boom Widens Gap Between Leading NBFCs
Aye Finance shares rise 4%, up over 35% YTD
Axis Securities Names 15 Stocks With Up To 40% Upside
What to Consider Before Purchasing a Suzuki Scooter
Gold loans set for Rs 30 lakh crore by FY28
Kotak Bank Recommends Saha, Kashyap as Vaswani Successors
Bajaj Finance Offers Property Loans Starting At 8%
