Bajaj Finance Shares Jump 3% After Strong Q3 Numbers: Analysts See Double-Figure Upside

Bajaj Finance's healthy third-quarter results combined with the "sharp 20%" correction in the past few months provide an excellent opportunity for investors, analysts at Motilal Oswal and HDFC Securities noted.

The Bajaj Finance Analyst: Led by Krishnan ASV, analysts at brokerage firm HDFC Securities upgraded their rating from ‘reduce' to ‘buy' and revised the target price from ₹7,314 to ₹6,700.

Analysts at Motilal Oswal Investment Services led by Abhijit Tibrewal maintained their ‘buy' rating with a target price of ₹6,880, a 20% upside from Friday’s closing price of ₹5,760.

The Bajaj Finance Thesis: The company posted a 40% year-over-year increase in its net profit this quarter at ₹2,973 crore. The analysts at Motilal Oswal Investment Services observed that the number was in line with their estimates and attributed it to "strong velocity in customer additions/ new loan acquisitions” and the company's ability to maintain stable margins. 

HDFC Securities also noted that the numbers were backed by the company's ability to maintain a healthy net interest margin (NIM). The brokerage firm added that the previous rating of ‘reduce’ was majorly based on the "downside risk to growth and expensive valuation." Now after around "20% valuation correction in the past three months," it recommends investors pick up shares in the NBFC. 

Analysts at Motilal Oswal Investment Services said that while it sees the company's NIM shrinking as competition in the segment increase it remains positive that the company's strong momentum in adding new customers and new loan acquisitions will only get stronger. 

Price Action: Bajaj Finance was trading 3.25% higher at ₹5,947.85 as the markets opened on Monday.

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Posted In: MoversTrading Ideasbajaj financeHDFC Securitieshome loansMotilal Oswal Financial Servicesnon-bank lending institutionsQ3FY23