Global brokerage Nomura has increased its target price for Bajaj Finance to ₹1,270, citing strong growth potential in gold loans and MSME segments. The stock remains in focus as investors assess the potential impact of draft RBI norms on revolving credit products.
Global brokerage Nomura has reiterated its positive stance on Bajaj Finance, raising its target price to ₹1,270 from the previous ₹1,140. This adjustment comes at a time when the non-banking financial company (NBFC) is navigating regulatory uncertainty, with the market closely watching the impact of draft guidelines from the Reserve Bank of India (RBI).
Impact of RBI Draft Norms
The central bank recently proposed new draft norms suggesting that NBFCs should primarily focus on term loans, potentially restricting revolving credit products. For Bajaj Finance, which has a significant portfolio of 'flexi-loans'—a product that functions like revolving credit—this has created a period of uncertainty. While these regulations are currently in the draft stage and the regulator is still collecting industry feedback, the potential change has kept investors cautious regarding the company's future product strategy.
Growth Drivers and Financial Outlook
Despite the regulatory overhang, Nomura remains optimistic about the company’s ability to sustain growth. Analysts at the firm expect the company’s total loan book, or Assets Under Management (AUM), to grow by 24-26% in FY27. This confidence is driven by a strategic pivot toward secured segments, specifically the expansion of the gold loan business and an expected recovery in loans to the MSME (Micro, Small and Medium Enterprises) sector starting in the second half of the fiscal year.
The company’s recent performance also provides a strong base for this outlook. In the first quarter of FY27, Bajaj Finance reported a standalone net profit of ₹6,081 crore, marking a 28% increase compared to the same period in the previous year. This indicates that despite the competitive environment and regulatory noise, the core business has continued to deliver solid profit growth.
Competitive Pressures and Risks
While the growth outlook remains positive, the company faces distinct challenges. Competition in the personal loan segment has intensified, resulting in urban personal loan growth slowing to below 20% year-on-year. Investors should note that maintaining profit margins remains a balancing act, as higher funding costs can squeeze the gap between the interest the company earns on loans and the interest it pays to lenders.
The most important monitorable for shareholders in the coming weeks will be the finalization of the RBI regulations. As the regulator reviews industry comments—with the feedback window closing on August 28, 2026—the market will look for clarity on whether the current model for flexible credit products will remain compliant under the new framework.