Bajaj Finance delivered exceptional Q1FY27 results with consolidated net profit rising 27.4% year-on-year to ₹5,986 crore, significantly beating analyst expectations of ₹5,846 crore. The non-bank lender's net interest income increased 23% to ₹12,571 crore, also surpassing estimates, while operating profit came in at ₹10,137 crore, marginally above Street forecasts. The company's strong performance prompted a wave of optimism from brokerages, with Citi, Jefferies and Morgan Stanley raising their target prices on the stock. Motilal Oswal has now joined the bullish sentiment, upgrading the stock to 'Buy' with a target price of ₹1,300, citing strong Q1 growth and robust future earnings potential.
The company's lending arm Bajaj Finance emerged as the primary earnings driver with consolidated profit after tax rising 28% to ₹6,081 crore and net total income increasing 22% to ₹15,224 crore. As reported by Business Standard, the company added 5.10 million customers during the quarter and booked 16.13 million new loans, up from 13.5 million a year earlier. Bajaj Finance also demonstrated improved asset quality with gross non-performing assets declining to 0.96% from 1.03% a year earlier, while net NPA improved to 0.39% from 0.50%. The company's assets under management grew 24% year-on-year to ₹5,46,944 crore from ₹4,41,450 crore, with a capital adequacy ratio of 20.90% and Tier-I capital ratio of 20.01%. Motilal Oswal notes that the company has outlined a comprehensive roadmap to strengthen its competitive positioning through customer-centric growth, AI-led execution, portfolio diversification and disciplined risk management.
The strong quarterly performance prompted significant analyst upgrades across major brokerages. Morgan Stanley retained its 'Overweight' rating and raised its target price to ₹1,225 from ₹1,175, calling the company to be in a 'strong phase'. Jefferies maintained its 'Buy' rating while increasing its target price to ₹1,280 from ₹1,210, continuing to rank the lender among its top picks in the large-cap financial space. Citi was the most optimistic, raising its target price to ₹1,300 while retaining a 'Buy' rating, describing the performance as 'stronger, cleaner, faster' and expecting FY27 guidance to be revised higher after the second quarter. Motilal Oswal has now upgraded the stock to 'Buy' with a target price of ₹1,300, premised on 4.8x FY28E BVPS, citing the company's entry into a phase of sustainable earnings compounding driven by broad-based growth, resilient profitability and improving asset quality. However, Macquarie remained the lone bear, reiterating its 'Underperform' rating with a target price of ₹850, citing rising borrowing costs and potential rate hikes as concerns.
The group's insurance subsidiaries faced mixed results during the quarter. Bajaj General Insurance reported gross written premium growth of 11% to ₹5,789 crore but profit after tax declined to ₹478 crore from ₹660 crore due to higher claims ratio and underwriting losses. The claim ratio increased to 74.3% from 71.1% while the combined ratio rose to 104.7% from 103.6%. Bajaj Life Insurance showed stronger growth with new business premium increasing 59% to ₹3,678 crore and gross written premium growing 35% to ₹7,399 crore, though shareholders' profit declined to ₹51 crore from ₹171 crore. However, the value of new business surged 87% to ₹271 crore from ₹145 crore, indicating improved profitability of newly written business.
