Source: The Economic Times
The stock market often reacts to headlines before reading the fine print. That was the case this Wednesday as Bajaj Finance (BAF) shares slipped 2%, hitting an intra-day low of ₹943.45. While a 6% year-on-year dip in net profit might spook casual investors, industry veterans and top-tier brokerages are looking at the bigger picture: a company voluntarily fortifying its balance sheet.
The “Profit Hit” Explained: Strategy Over Stress
The primary catalyst for the stock’s movement was the Q3FY26 earnings report, which showed a consolidated net profit of ₹3,977.85 crore, down from ₹4,246.54 crore in the previous year.
However, the “why” matters more than the “what.” Bajaj Finance voluntarily revised its Loss-Given-Default (LGD) floors, resulting in an accelerated provision of ₹1,400 crore. In plain English? They decided to set aside more cash now to protect against potential future risks rather than waiting for trouble to knock on the door.
According to Nomura, this is a “conservative balance sheet approach.” If you strip away these one-time provisions, the actual credit costs were 192 basis points, lower than the previous quarter.
Brokerage Breakdown: Is it Time to Buy the Dip?
Despite the short-term price correction, leading analysts remain bullish on the NBFC giant’s trajectory.
Nomura: A “Buy” with a Focus on Market Share
Nomura maintained its positive stance, even after a slight adjustment of its target price to ₹1,195.
- The Outlook: Management is slowing down MSME growth temporarily (to 11%) to navigate current market stress, but expects a recovery to 20% within the next few quarters.
- Competitive Edge: Despite rising competition from PSU banks in the personal loan sector, Nomura believes Bajaj Finance is well-positioned to gain market share across most of its product lines.
JM Financial: Upgraded to “Buy”
In a notable move, JM Financial upgraded the stock from “Add” to “Buy”, raising its target price to ₹1,125.
- Encouraging Trends: They highlighted that “stage 3” assets (bad loans) are actually improving.
- Value Play: With the stock correcting 12% over the last four months, analysts see limited downside. They project a healthy 22% loan growth (CAGR) through 2028.
Key Takeaways for Investors
| Metric | Q3FY26 Status | Analyst Sentiment |
| Revenue | ₹21,213.89 Cr (Up from ₹18,035 Cr) | Strong Growth |
| Provisions | ₹1,400 Cr (Accelerated) | Conservative/Healthy |
| AUM Growth Guidance | 22% for FY26 | Optimistic |
| Stock Valuation | Trading at 3.7x FY28 BVPS | Attractive Entry Point |
The Bottom Line
Bajaj Finance is not showing signs of fundamental weakness; instead, it’s demonstrating maturity. By taking a proactive hit on profits now to strengthen its “LGD” assumptions, the management is clearing the deck for smoother sailing in FY27. For the patient investor, this 2% dip signals that the company prioritises long-term stability over quarterly optics.
