Bajaj Finance shares rise 3% as UBS upgrades to ‘neutral’, raises target price

As per the latest business developments, Shares of Bajaj Finance hit an intraday high of Rs 1,041, rising more than 3%, on September 23 as the stock snapped its two-session decline after investment bank UBS upgraded its recommendation to "neutral" from "sell".

The stock was the top Nifty gainer on September 23. Its target price was additionally boosted to Rs 1,100 from Rs 910.

India's non-bank lenders could be entering a fresh unsecured credit expansion cycle, led by a recovery in personal loans, stated UBS. The investment banker anticipates healthy asset quality, abundant system liquidity, and a more risk-on stance among lenders to backing expansion. UBS sees personal loan expansion to be around 30% for non-banking financial firms and 9% for banks and anticipates this recovery to benefit private banks and large NBFCs with established personal-loan franchises.

"With gold prices stabilising and, thus, likely gold loan expansion moderation, a key substitute for personal loans over past few years could lose some momentum. This may benefit private banks and large NBFCs with firm personal loan franchises," stated UBS.

Regarding Bajaj Finance, UBS stated: "Expect cyclical EPS upgrades on yield-accretive expansion and firm asset quality, though its valuation stays demanding."

At 1:05 pm on September 23, Bajaj Finance shares were trading 2.5% elevated at Rs 1,034.2 apiece.

Global brokerage Jefferies sees a firm outlook for Bajaj Finance. In the near-term, the firm is anticipated to see firm demand, asset quality, and efficiencies, leading to a tad softer net interest margin. Over the next 10 years, the firm's management plans to grow assets under management at a compound annual expansion rate of 23%.

Jefferies maintained a Buy rating with a target of Rs 1,280.