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Analyst Recommends Bajaj Finance Stock with ₹1,180 Target
Pankaj Pandey, the Head of Research at ICICI Securities, has strongly recommended investors buy shares of Bajaj Finance. Speaking to ET NOW, Pandey highlighted that the Non-Banking Financial Company (NBFC) stock looks attractive at its current trading levels, hovering around the ₹1,000 mark. He believes the stock presents a favorable risk-reward profile and is poised to deliver substantial returns over the next year.
Profitability and Growth Outlook
According to Pandey's analysis, Bajaj Finance is expected to exhibit robust financial performance. The firm forecasts a profitability growth rate of approximately 18% to 20%. Furthermore, the company's bottom line is projected to grow even more impressively, at a rate of 22% to 24%. These optimistic projections are underpinned by anticipated improvements in market conditions and credit demand.
Market Performance and Strategic Advantages
Bajaj Finance shares have experienced a period of range-bound trading, staying between ₹980 and ₹1,000 for the last four sessions, which has led to underperformance relative to broader market trends. However, from a technical standpoint, the stock is trading above its 200-day moving average. This suggests that the long-term upward trend for the stock remains intact. Pandey also pointed out that Bajaj Finance is likely to be a significant beneficiary of potential Goods and Services Tax (GST) cuts.
Impact of GST and Consumption Boost
Pandey elaborated that any reduction in GST rates could provide a substantial boost to overall consumption. This increased consumer spending is expected to drive higher credit demand, which directly benefits NBFCs like Bajaj Finance. This positive scenario is anticipated to have a favorable impact on the company's earnings.
Strong 2025 Performance and Corporate Actions
Despite recent consolidation, Bajaj Finance has demonstrated exceptional performance throughout 2025. The stock has significantly outperformed the benchmark indices, delivering a return of around 43% by the end of the year, far exceeding the Sensex's approximate 9% jump. Earlier in June, Bajaj Finance executed a 1:1 stock split, reducing its face value from ₹2 to ₹1. Subsequently, it issued four bonus shares of ₹1 for every one share held by investors, enhancing liquidity and share availability.
Investment Recommendation
Concluding his assessment, Pankaj Pandey reiterated his positive stance on Bajaj Finance. "We feel that Bajaj Finance stock should do well and should be bought at current levels," he stated. ICICI Securities has set a price target of ₹1,180 for Bajaj Finance shares, indicating a potential upside of over 19% from current trading levels. Investors are advised to consider this recommendation given the positive outlook and growth prospects.
Impact
This analyst recommendation with a substantial price target could boost investor confidence in Bajaj Finance. A successful price target achievement would represent a significant return for shareholders. The positive outlook on consumption and credit demand also signals broader economic recovery potential for the financial sector.
Impact Rating: 8/10
Difficult Terms Explained
- NBFC: Non-Banking Financial Company. These are institutions that provide financial services similar to banks but do not hold a banking license.
- Risk-Reward Profile: An assessment of the potential return of an investment compared to its risk. A favorable profile means the potential reward is high relative to the risk taken.
- Bottom Line: The net profit or loss of a company after all expenses and taxes have been deducted.
- GST: Goods and Services Tax. An indirect tax levied on the supply of goods and services in India.
- 200-day moving average: A technical analysis indicator showing the average closing price of a stock over the past 200 trading days, used to identify long-term trends.
- Stock Split: A corporate action where a company divides its existing shares into multiple shares, increasing the number of shares outstanding and decreasing the price per share proportionally.
- Bonus Shares: Additional shares issued by a company to its existing shareholders for free, typically in proportion to their current holdings.