UBS has maintained a Sell rating on Bajaj Finance’s (BAF) share price, with a target price of ₹6,800 per share, implying a 19% downside from the current market price (CMP) of ₹8,430.
Despite a 20%+ rally in Bajaj Finance’s share price year-to-date (YTD), UBS remains cautious on the stock, citing structural concerns. The brokerage expects credit costs to remain cyclically high, which could pressure profitability in the long term.
A key concern highlighted by UBS is the structural decline in return on assets (RoA). The brokerage believes that BAF’s long-range strategy is unlikely to meet market expectations, leading to a disappointing earnings trajectory. Additionally, too much optimism is already factored into consensus EPS estimates, making the stock vulnerable to corrections.
UBS also pointed out that the stock currently prices in an ambitious 23% 10-year EPS compound annual growth rate (CAGR), a target that could be difficult to achieve. The brokerage remains concerned about incremental unsecured lending in the non-banking financial companies (NBFCs) sector, which has shown signs of deterioration.
With margins and RoA expected to continue declining structurally, UBS maintains a bearish stance on Bajaj Finance’s share price, cautioning investors about potential downside risks.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a professional advisor before making investment decisions.