Bajaj Finance shares drop over 3% despite 29% Q2 profit growth; Nomura, CLSA, JP Morgan retain bullish calls

Net interest income (NII) rose 24% year-on-year to Rs 13,335 crore from Rs 10,785 crore in the year-ago period, while assets under management (AUM) grew 26% to Rs 5.85 lakh crore. Here’s what brokerages are saying: HSBC: Buy | Target price: Rs 1,270 HSBC said Bajaj Finance's "segment-leading performance continues" and that "MSME loan growth [is] likely to revive". The brokerage said "multiple levers [are] available to offset revenue headwinds and protect RoA/RoE in FY28-29".

It added that a potential capital raise could support growth and profitability. Nomura: Buy | Target price: Rs 1,270 Nomura said Q2FY27 net profit was "in-line with estimates". It noted that the company had raised its FY27 loan growth guidance to 26-27%, while keeping its medium-term guidance unchanged at 23-25%. The brokerage expects the credit cost run-rate in H2FY27 to "match H1FY27", but cautioned that "rising rates could create marginal NIM headwinds".

Nomura cut its FY28-29 earnings per share estimates by 2-3% and expects return on assets (RoA) and return on equity (RoE) of 4.2% and 19.9%, respectively. It said the stock trades at 3.4 times one-year forward price-to-book value. JPMorgan: Overweight | Target price: Rs 1,260 JPMorgan highlighted a strong second quarter, with NII rising 24% year-on-year to Rs 13,330 crore, pre-provision operating profit (PPoP) increasing 21% to Rs 10,700 crore and profit after tax (PAT) growing 29% to Rs 6,270 crore.

The brokerage said the revised FY27 loan growth guidance of 26-27% reflected "strong business momentum". It described asset quality as "benign", with "only transient stress in short-tenure gold loans". JPMorgan also highlighted the company's "focus on protecting RoA despite higher funding costs & NIM risks". It called Bajaj Finance a "best-in-class earnings compounder", citing loan growth, AI-led operating leverage and credit-cost management, and expects a 21% earnings CAGR over FY27-29.

CLSA: Outperform | Target price: Rs 1,300 CLSA said Q2FY27 profit before tax was "in-line, 4% above estimates after adjusting for a Rs 340 crore macro-economic provision". The brokerage noted that AUM growth accelerated to 26% year-on-year from 24% in Q1FY27, while FY27 growth guidance was raised by 3-4 percentage points to 26-27%. PPoP "slightly exceeded estimates", and the net slippage ratio declined 110 basis points year-on-year, indicating stronger asset quality.

CLSA said interest rate swaps had supported funding costs, but management had "flagged margin pressure from rate hikes". It also noted that an equity raise was planned to fund growth and address leverage exceeding five times. The brokerage added that there were "no specific details yet" on how the impact of insurance guidelines would be offset.