Bajaj Finance Gets Target Price Hike From Jefferies As Credit Costs Seen Falling, Shares Rise

Bajaj Finance shares rose over 2% in early trade on Friday after global brokerage Jefferies upgraded the stock to 'buy' from 'hold' earlier and raised the target price to Rs 8,000 from Rs 7,500 per share, implying an upside potential of 16%.

In a note dated February 16, 2023, Jefferies said that the recent correction in Bajaj Finance shares provides a good entry point for investors. The brokerage expects the company's credit costs to decline in the coming quarters, supported by a strong recovery in collections and a conservative provisioning policy.

Analysts at Jefferies also highlighted Bajaj Finance's strong liability franchise and its ability to raise funds at competitive rates. They believe that the company is well-positioned to benefit from the ongoing economic recovery and the increasing demand for consumer finance. However, Jefferies has cut its earnings per share (EPS) estimates for Bajaj Finance for the financial year 2023-24 (FY24) by 4% to factor in higher credit costs in the near term.

Bajaj Finance shares have been under pressure in recent months due to concerns over rising credit costs and the impact of higher interest rates on its margins. However, Jefferies believes that the recent correction has created a good buying opportunity for investors. The brokerage expects Bajaj Finance to deliver strong growth in the coming quarters, driven by its strong execution capabilities and its focus on customer service.

Bajaj Finance is one of the leading non-banking financial companies (NBFCs) in India. The company offers a wide range of financial products and services, including consumer loans, two-wheeler loans, and business loans. Bajaj Finance has a strong track record of growth and profitability. The company's assets under management (AUM) have grown at a CAGR of over 25% in the last five years.