Floating through the tumultuous year thus far, non-bank finance lender Bajaj Finance sailed out as the top performer on the Nifty 50 for 2025 till date, delivering 36% returns. The surge in the stock this year swelled investors’ wealth by a staggering Rs 1.5 lakh crore.
Backed by a consistent uptick, the stock landed at its record high of Rs 9,393 in the last session taking its market capitalization closer to the Rs 6 lakh crore-mark.
With growth prospects for the NBFC giant still standing strong, the spike in the stock was also aided by a consistent increase in foreign institutional holding through Q4 FY25, which constituted much of the year so far. FIIs have upped their stake in the lender by 0.7% through the March quarter, taking it to 21.45% in Q4 from 20.79% in Q3. The feat seems much more remarkable when put in the context that FIIs chose to lift stake in Bajaj Finance at a time when they on a relentless sell mode in the Indian equity market.
As Bajaj Finance shares continue their march ahead, brokerages are also vouching for a ride. Analysts at Motilal Financial Services see a better future for the NBFC sector where Bajaj Finance is the top player. The firm’s expectations are banked on hopes of a reversal in the rate cycle and indications from select NBFCs that credit costs have either peaked or are nearing their peak. “Further, the reduction in the repo rate, translating into a positive NIM outlook for the sector will continue to support sector performance,” MOFSL wrote in a note.
Taking on a more optimistic view, Elara Capital upgraded shares of Bajaj Finance to a ‘buy,’ forecasting a 28% upside with its target price of Rs 11,161. The brokerage believes that Bajaj Finance is poised for strong growth, stating that the ‘stage set for elephant to dance yet again.’
While recent management changes have helped boost valuations, Elara notes that the true strategic advantages, those capable of driving a re-rating, are still unfolding. Factoring in these catalysts, the firm anticipates a 25% CAGR in both AUM and EPS, alongside a 24% CAGR in Net Interest Income (NII) for Bajaj Finance. This is expected to translate into a healthy Return on Assets (RoA) of 4.9% and Return on Equity (RoE) of 21% over FY24–27.
Elara Capital also pointed the rapid scale-up in rural markets as a key pillar of growth for the lender, marked by a doubling of the rural network while urban locations have reduced by a tenth over the past 1.5 years. "This expansion, coupled with an anticipated 27% CAGR in the EMI franchise, is set to propel consumer finance growth,” Elara wrote.
Despite these strong fundamentals, Elara noted that Bajaj Finance still continues to trade at a 40% discount to its six-year median price-to-book value, which according to the firm, leaves the floor open for significant upside potential.
