Bajaj Finance's AI Call: Will it be Enough to Turn Around the Tumbling Share Price?

Bajaj Finance Share Price: Shares of Bajaj Finance, a non-banking finance company, surged by over 3 per cent on Thursday as the company announced its plans to become a FINAI company by FY29.

During the company's investor day, Bajaj Finance pointed out three new megatrends— green finance, multi-cloud and zero trust— taking the total count of these to 28. The company announced the integration of AI in multiple avenues like customer engagement, enhancing productivity, revenue growth, reducing OPEX (operational expenditure) and credit costs.

"Bajaj Finance Ltd. is currently implementing 29 GenAI use cases across 25 work streams, which will deliver an annual cost save of Rs 150 crore in FY26 alone. But more importantly, GenAI adoption has helped us build a much clearer strategic roadmap," the company said in an investor presentation.

This pushed the investor sentiment into optimistic territory as the shares of Bajaj Finance surged by over 3.5 per cent on the National Stock Exchange. The shares of the company concluded at Rs 7,099 price level on the National Stock Exchange.

Besides the AI bet of the NBFC, the company also talked about its LRS (long-range strategy) under BFL 3.0 vision, wherein the company listed many of its targets to be achieved by FY29. From increasing the total market share to over 3.2-3.5 per cent to building a triple-digit customer franchise, the NBFC has taken-up many ambitious targets.

The company has also set a cost-saving target to improve AUM (Asset under management) per cross-sell franchise to Rs 80,000-85,000 by FY29, up from Rs 64,800 recorded in September 2024.

At the same time, PAT (profit after tax) per cross-sell franchise is expected to increase to Rs 3,800-4,000 by FY29 as compared to Rs 1,374 in H1FY25.

While the ambitious targets have definitely boosted investor sentiment, it's important to note that Bajaj Finance's share price trajectory has been far from optimistic.

Bajaj Finance Share Price Struggles

On year-to-date basis, Bajaj Finance shares have remained in the red territory, delivering a negative return of 2.7 per cent. On annual basis, as well, the shares have struggled to stay in the positive zone. During the last 3 years, the share price has remained range-bound.

However, many analysts are now projecting a positive growth trajectory for the stock. ICICI Direct has increased its target price to Rs 8,500 and has maintained its BUY recommendation on the stock. Anand Rathi has also taken a similar stance and has maintained its BUY call, setting the target price at Rs 7,905.

Currently, Bajaj Finance's stock is valued at 3.9 times its projected book value for FY26. If the stock reaches the target price, it would be valued at 4.4 times its projected BV for FY26, the brokerage house said.

Motilal Oswal has taken a balanced tone and has maintained its NEUTRAL call, increasing the target price to Rs 7,500 crore.

"While the valuations are attractive at 3.7x P/BV and 20x FY26E P/E, we do not anticipate any significant upside catalysts until it successfully navigates the asset quality challenges in its B2C loan book and makes concerted efforts to improve the proportion of secured loans in its loan mix," the brokerage house said.