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UBS has a “Sell” rating on Bajaj Finance with a price target of ₹6,800, which implies a potential downside of 20% from Wednesday’s closing levels.
The brokerage wrote in its note that it remains cautious on Bajaj Finance despite its moves so far in 2025 as it expects credit costs to remain cyclically high, particularly in personal and SME loans, which account of 38% of its combined book.
Bajaj Finance shares have risen 24% so far in 2025 and are the best performers on the Nifty 50 index year-to-date, followed by Bajaj Finserv, whose shares are up 19% so far. In comparison, the Nifty 50 index is down 3% this year.
UBS believes that Bajaj Finance’s Return on Assets (RoA) will continue to see a structural decline, along with its margins and that will be a disappointment when compared to the company’s long-range strategy.
“We also believe that too much optimism is baked into the company’s consensus Earnings Per Share (EPS) estimates, while the stock price is baking in a 10-year EPS Compounded Annual Growth Rate (CAGR) of 23%,” UBS wrote in its note, adding that this is a tough ask.
UBS also said that the incremental unsecured underwriting for NBFCs has been inferior.
Out of the 39 analysts who have coverage on Bajaj Finance, 28 of them have a “buy” rating, while six of them have a “sell” recommendation on the stock. The other five have a “hold” rating.
Bajaj Finance shares ended 0.4% lower on Wednesday at ₹8,430 and are trading close to their record high level of ₹8,662.
