Operational Growth vs. Market Reaction
Bajaj Finance's latest results show strong operational expansion, but the stock market's response indicates underlying investor concerns. While assets under management and customer numbers continue to grow, a drop in the deposit book and a recent stock price decline suggest that market sentiment may be diverging from the company's fundamental growth.
Record AUM and Loan Growth
Bajaj Finance achieved a landmark ₹5 lakh crore in Assets Under Management (AUM) by March 31, 2026, up 22% from ₹416,661 crore the previous year. This increase was driven by a 20.5% surge in new loans booked in the fourth quarter of fiscal year 2026, totaling 12.89 million versus 10.70 million a year earlier. The customer base grew by 15.13 million over the year to 119.33 million as of March 31, 2026, with 3.93 million new customers added in the final quarter. These figures highlight strong loan demand and a growing retail customer network.
Valuation and Analyst View
Bajaj Finance has a market capitalization between ₹5.14 trillion and ₹5.40 trillion. Its Price-to-Earnings (P/E) ratio is roughly 27.35x to 29.32x, which is a premium over the Non-Banking Financial Company (NBFC) sector average of 18.75x. Analysts generally rate the stock 'Outperform' with a 12-month price target around ₹1,059.03, implying over 28% upside from its current ₹826.85 price. Despite this, the stock has fallen over 3.56% year-on-year. This performance differs from the broader NBFC sector, which expected 15-17% asset growth for FY26, outpacing bank credit growth. The Reserve Bank of India's decision to keep the repo rate at 5.25% in February 2026 offered a stable interest rate environment favorable for lenders. However, this stability hasn't boosted Bajaj Finance's stock price, possibly due to industry-wide issues or company-specific challenges.
Deposit Decline and Stock Weakness
A primary concern for investors is the decrease in Bajaj Finance's deposit book, which dropped to about ₹68,550 crore as of March 31, 2026, from ₹71,403 crore a year prior. This reduction in a key funding source, alongside robust AUM expansion, raises questions about the company's funding strategy and potential reliance on costlier alternatives. The stock has also shown significant short-term weakness, falling over 15% in the past month and 13% over three months, lagging the Sensex. This gap between business performance and stock price, combined with its high P/E ratio (around 28.5x vs. the industry's 17.1x), suggests investors are anticipating challenges or are hesitant about its high valuation. Some analysts have also expressed caution; for instance, MarketsMojo's 'Hold' rating was reassessed in March 2026. Broader research on the NBFC sector indicates a general shift toward controlled growth and risk management, which might be influencing institutional investor sentiment.
Analyst Projections and Outlook
Looking ahead, analysts forecast continued earnings and revenue growth for Bajaj Finance, with projected annual increases of 19.1% for earnings and 26.1% for revenue. Return on equity is expected to reach 21.4% within three years. The company is projected to achieve compound annual growth rates (CAGR) of 24% for AUM, 22% for Net Interest Income (NII), and 27% for earnings from FY27-28E. This outlook is supported by stable Net Interest Margins (NIMs) and operating leverage, with credit costs anticipated to return to normal levels. Despite current market sentiment, Bajaj Finance's forward guidance and analyst consensus remain positive about its long-term prospects, assuming it can manage funding challenges and maintain asset quality.