Stock to Buy: Fundamentally Strong Stock With an Upside Potential of 22%

Synopsis: Morgan Stanley remains bullish on Bajaj Finance, citing strong loan demand, stable asset quality, and AI-led growth initiatives, with a target price of ₹1,120, implying 21.64% upside potential.

This Large-cap NBFC stock, engaged in consumer lending, rural finance, SME financing, mortgages, commercial lending, and wealth-related financial services across urban and rural India, is in focus after Morgan Stanley gave an Overweight target of Rs. 1,120, which has an upside potential of 21.64 percent.

With a market capitalization of Rs. 5,74,936.00 crore, the shares of Bajaj Finance Limited were currently trading at Rs. 923.45 per equity share, rising nearly 0.29 percent from its previous day’s close price of Rs. 920.75.

What is the News?

Morgan Stanley, a prominent brokerage firm, has recommended a “Overweight” call on Bajaj Finance Limited with a target price of Rs. 1,120 per share, indicating an upside potential of 21.64 percent from its current price of Rs. 920.75 per share. 

Morgan Stanley maintains its positive view on Bajaj Finance as the company continues to see strong demand across lending segments despite global geopolitical uncertainties. Management commentary on loan growth and asset quality remains stable after Q4, indicating confidence in business momentum and credit performance. This supports expectations of healthy earnings growth ahead.

The brokerage also highlighted that rising bond yields could increase funding costs in the near term, which may put some pressure on margins. However, Bajaj Finance’s continued focus on technology and AI-led initiatives is expected to improve efficiency, strengthen customer engagement, and support long-term growth, keeping the overall outlook positive.

Assets Under Management (AUM):

Bajaj Finance continues to strengthen its diversified lending portfolio, with total AUM rising to Rs. 5.1 lakh crore by March 2026. Mortgages remain the biggest segment at Rs. 1.62 lakh crore, contributing nearly 32 percent of the overall book. Urban B2C loans stand at Rs. 1.04 lakh crore, making up over 20 percent of total AUM, reflecting strong retail demand.

MSME lending at Rs. 51,570 crore and commercial lending at Rs. 33,839 crore also saw healthy traction, while rural B2C loans reached Rs. 25,234 crore. The balanced mix across consumer, business, rural, and secured lending segments highlights Bajaj Finance’s strong growth momentum and stable long-term outlook.

Geographic Presence:

Bajaj Finance continued to expand its geographic presence in FY26, with total lending locations reaching 4,098 by March 2026. Urban lending locations stood at 1,527, while rural lending locations remained strong at 2,571, highlighting the company’s deep reach across India. 

Gold loan branches increased to 1,507 from 1,369 last year, reflecting strong expansion in secured lending. The company also operated 447 MFI branches, supporting growth in the rural financing segment.

Company Overview:

Bajaj Finance Limited is a leading Indian non-banking financial company (NBFC) headquartered in Pune, Maharashtra. A subsidiary of Bajaj Finserv Limited, it provides diversified lending and deposit products across consumer, SME, and commercial segments. The company is among India’s largest private-sector NBFCs and plays a pivotal role in retail finance innovation.

Recent Quarter Results:

Coming into financial highlights, Bajaj Finance Limited’s revenue has increased from Rs. 18,294 crore in Q4 FY25 to Rs. 21,606 crore in Q4 FY26, which has grown by 18.10 percent. The net profit has also grown by 22.15 percent from Rs. 4,546 crore in Q4 FY25 to Rs. 5,553 crore in Q4 FY26.

Bajaj Finance Limited’s revenue and net profit have grown at a CAGR of 25.18 percent and 34.33 percent, respectively, over the last five years.

In terms of return ratios, the company’s ROCE and ROE stand at 10.8 percent and 18.2 percent, respectively. Bajaj Finance Limited has an earnings per share (EPS) of Rs. 30.6, and its debt-to-equity ratio is 3.82x.

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