The stock market witnessed a flurry on Friday, July 25th, as shares of Bajaj Finance, a major non-banking finance company in the country, traded with a sharp decline. In the initial session itself, it fell by more than 6% to ₹897.65, while the previous closing price was ₹959. This meant that despite b quarterly results, the market gave the company a jolt. By 10:03 AM, the share was trading at ₹912.25, down by 4.87%.
Strong Q1 FY26 Results, But Why the Pressure?
Bajaj Finance announced its first quarter results for fiscal year 2026 on Thursday. The company delivered a stellar performance during this period. According to information provided to the exchange, the company's net profit in the April-June quarter increased by 22% year-on-year to ₹4,765 crore, compared to ₹3,912 crore in the same quarter last year.
Similarly, net interest income (NII) also increased by 22.3% to ₹10,227 crore, compared to ₹8,365 crore last year. The company's assets under management (AUM) also increased at a rate of 25% to ₹441,450 crore.
Why Did the Stock Fall After the Results?
The question being raised in the market is why the share price fell despite the company's b performance. According to analysts, the reason is high investor expectations and cautious commentary from the management.
The management spoke of challenges in the MSME segment and adopted a somewhat balanced approach to the future growth outlook. This irked some investors, who began to book profits.
What Motilal Oswal's Report Said
Brokerage firm Motilal Oswal has given Bajaj Finance a 'Neutral' rating. According to the report, the company's growth is stable, but pressure may persist on the MSME portfolio. However, there is hope of relief as the cost of debt remains below the upper range.
The brokerage expects a 24 percent CAGR in the company's AUM and a 25 percent CAGR in profits. Meanwhile, ROA (Return on Assets) is estimated to reach around 4.1 percent and ROE (Return on Equity) to reach 21 percent by fiscal year 2027. Along with this, Motilal Oswal has set a target of ₹1,000 for the share, which is approximately ₹80 above the current price.
Strong Growth in AUM and Deposits
Talking about Bajaj Finance's new loan bookings, it stood at 13.49 million in this quarter, which is 23 percent higher compared to last year. At the same time, the company's deposits also increased by 15 percent to ₹72,100 crore.
This data makes it clear that the company's loan distribution and deposit base are continuously strengthening. In addition, the company's loan recovery capability remains b due to its focus on digital infrastructure and the consumer segment.
Market Expectations and Valuation Pressure
Some analysts in the market believe that Bajaj Finance's share was already trading at an expensive valuation. In such a situation, the fall in the share despite b results may just be a technical correction. Investors had already decided to book profits in the rally before the results.
The Effect of Weak Market Sentiment Was Also Visible
Overall weakness was seen in the stock market on Friday, which was clearly visible on high beta stocks like Bajaj Finance. The effect of the fall in Sensex and Nifty was more visible on NBFC stocks.
In such an environment, when mixed signals are being received from the global market and uncertainty remains on the domestic front regarding the Reserve Bank's next policy, investors are adopting a slightly cautious approach.
All Eyes on Bajaj Finance's Next Move
After the b results of this quarter, investors are now eyeing Bajaj Finance's next move. The company's excellent performance on the AUM, NII, and PAT fronts has raised expectations, but there is no guarantee when the market sentiment will change.
After the share slipped below ₹900, it will be interesting to see whether it sees a technical recovery or whether this pressure persists for some more time. Given the mixed opinions of experts and the management's language, this stock will remain in the focus of investors in the coming weeks.
