Citi has retained a Neutral rating on Bajaj Finance, with a target price of ₹983, indicating minimal upside from the current market price of ₹956.50.
The brokerage noted that the company’s core credit cost remained steady at 2.02% in Q1FY26, despite ongoing stress in the MSME and 2/3-wheeler loan segments. Bajaj Finance has already restructured ₹220 crore worth of MSME loans and expects another ₹150 crore to be restructured in Q2, underlining asset quality risks in that book.
Importantly, the management has maintained its credit cost guidance at 1.85–1.95% for FY26, which Citi sees as a positive signal of stability, even amid sectoral stress.
The report also highlights an improvement in cost of funds (CoF), which declined by 20 basis points quarter-on-quarter to 7.79%, with scope for further optimisation in coming quarters. However, Citi believes that valuation leaves little room for upside, given persistent concerns around MSME stress and moderate growth expectations.
Disclaimer: The views expressed in this article are those of the brokerage firm (Citi) and do not constitute investment advice. Investors are advised to consult a certified financial advisor before making any investment decisions.
