Bajaj Finance, Bajaj Finserv plunge over 5% on disappointing Q4 results

Synopsis

Bajaj Finance shares tumbled 5.3% to close at ₹8,613.5 while Bajaj Finserv dropped 5.6% to close at ₹1,951 on Wednesday. Benchmark Nifty Index ended nearly flat on Wednesday.

Mumbai: Shares of Bajaj Finance and Bajaj Finserv slumped over 5% on Wednesday after their fourth quarter results were lower than consensus estimates and the company guided for slower growth in FY26. Analysts said the stocks are expected to remain under pressure as the recent run-up in the share price baked in higher growth expectations.

Bajaj Finance shares tumbled 5.3% to close at ₹8,613.5 while Bajaj Finserv dropped 5.6% to close at ₹1,951 on Wednesday. Benchmark Nifty Index ended nearly flat on Wednesday.

"Bajaj Finance's results fell short on a couple of fronts - higher credit costs and decline in margins," said Dnyanada Vaidya, research analyst - BFSI, Axis Securities. "Moreover, the management has revised its growth guidance a tad lower to 24-26% compared with its earlier guidance of 25-27%."

So far this year, both Bajaj Finance and Bajaj Finserv's shares surged 24.2% and 23.8%, respectively, while Nifty gained 2.5%.

"The stock has outperformed the index with a sharp run-up over the past six months, which has resulted in a catch-up on valuations," said Vaidya. "However, the correction in the stock is primarily led by a setback on credit costs in FY25 and marginally slower growth guidance for FY26."

Bajaj Finance's decision to announce bonus shares and a special dividend of ₹56 per share failed to lift sentiment as investors chose to focus on the outlook.

"Given the run up in the stocks in recent months, the lower growth guidance led to a decline in the shares," Hemang Jani, director, Finazenn - an investment advisory. "The stocks are trading at expensive valuations, and it is difficult to justify the 4.5 to 5 times price to book ratio for Bajaj Finance, despite the growth guidance of 25% for next year."

Agencies

Vaidya said, despite the cut in guidance on key parameters, the long-term investment thesis for Bajaj Finance remains intact

"We believe near-term pressure on the stock could be visible with no major re-rating levers visible; however, this is a good time to accumulate the stock on dips," said Vaidya.

...moreless

...moreless