Stock to buy: Axis Securities recommends Bajaj Finance as its pick of the week; sees up to 11% upside

Stock to buy: Bajaj Finance share price declined over a percent on Tuesday, while the stock is down more than 6% in one month. The stock has failed to give positive returns this year so far. However, based on the company’s strong fundamentals, analysts expect Bajaj Finance shares to see decent upside going ahead.

Axis Securities has named Bajaj Finance shares as its pick of the week. The brokerage has a ‘Buy’ rating on the stock and Bajaj Finance share price target of ₹8,030 apiece, implying an upside of 11% from Monday’s closing price. The time horizon is six to nine months.

In the first quarter of FY25, Bajaj Finance’s AUM growth was strong at 31% YoY and 7% QoQ, with growth healthy across segments. With the regulator lifting restrictions on both the digital lending products – ‘eCOM’ and ‘instaEMI’, the company went live offering the products across all platforms in mid-June 2024.

“The momentum on these products is expected to improve over the next 3 quarters. While Bajaj Finance has been going slow in the rural B2C segment over the last 12-18 months with stress emerging, thus the company has trimmed its growth in the segment. However, the growth in the rural B2B remains healthy and Bajaj Finance could exit FY25 with healthy growth in the segment and a continued improving trend thereon,” Axis Securities said.

On an overall portfolio, it expects Bajaj Finance to clock an AUM growth of 26-28% in FY25.

In the quarter ended September 2024, net interest margins (NIM) are estimated to continue to face headwinds and margins are likely to stabilise from Q3FY25 onwards. The brokerage firm expects NIMs to settle between 9.5%-9.6% over FY25-27E versus 9.8% currently.

It also expects credit cost to be contained at 1.75% - 1.85%, in-line with management guidance.

Bajaj Finance Share Price

Bajaj Finance stock price has fallen 6.5% in one month and over 3% year-to-date (YTD). The stock has declined nearly 12% in the past one year period.

Bajaj Finance shares hit a 52-week high of ₹8,162.00 apiece on October 17, 2023, and touched a 52-week low of ₹6,190.00 apiece on March 06, 2024. 

At 11:40 Am, Bajaj Finance shares were trading 1.48% lower at ₹7,103.20 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.