Bajaj Finance Sees 6% Drop Despite Impressive 19% Profit Growth: Key Concerns for Investors

Bajaj Finance Experiences Notable Stock Drop Despite Strong Q4 Earnings

In a surprising turn of events, Bajaj Finance witnessed a significant drop in its share price, falling nearly 6% during early trading hours today. The stock hit a low of Rs 8,556 per share, a stark contrast to the company’s impressive 19% year-on-year (YoY) increase in net profit for Q4 FY25. Analysts are now closely examining the implications of this downturn, particularly in light of the revised growth outlook under the company’s new leadership.

Understanding Bajaj Finance’s Stock Performance

While the immediate decline might raise eyebrows, it’s essential to consider the broader picture of Bajaj Finance’s stock performance. Over the last month, the stock has remained relatively stable, showing a minimal dip of just 0.11%. However, when we take a longer view, the stock has experienced a remarkable 26% surge over the past six months and a 25% increase over the past year.

52-week high: Rs 9,660
52-week low: Rs 6,375.70

Analyst Opinions on Bajaj Finance’s Future

Cautious Outlook from Macquarie

Despite the strong quarterly results, Macquarie remains skeptical about the future trajectory of Bajaj Finance. They have issued an Underperform rating with a target price of Rs 6,290, notably lower than the current market price. The firm noted that while the Q4 profit aligned with expectations, higher provisions and lower tax rates tempered the overall positive sentiment.

Positive Stance from Jefferies

In contrast, Jefferies has retained a Buy rating on Bajaj Finance following the Q4 FY25 results. However, they have adjusted their near-term growth forecast downward to 24-25% YoY for FY26, compared to the previous estimate of 25-27%. The firm highlighted a robust 26% YoY growth in assets under management (AUM), driven by urban personal loans and SME loans, although they noted a 12% YoY decline in two-wheeler and three-wheeler loans due to a strategic exit from a financing arrangement with Bajaj Auto.

Jefferies also reported a positive shift in core credit costs, which decreased to below 2% of average AUM in Q4, indicating an improvement in asset quality. They quoted, “Mr. Saha is focused on enhancing credit quality and moderating growth to prevent asset quality issues like those faced in FY25.” Despite a slight reduction in earnings estimates, Jefferies remains optimistic, forecasting a 25% growth in AUM from FY25 to FY28 and a 24% CAGR in earnings.

Key Highlights from Bajaj Finance’s Q4 FY25 Results

Bajaj Finance reported a net profit of Rs 4,546 crore for the March 2025 quarter, reflecting a significant 19% increase compared to Rs 3,824.53 crore in the same period last year.

Major Dividend Announcements

The company has declared two substantial dividends for its shareholders:

A special interim dividend of Rs 12 per share (600% of face value), set to be credited by May 2025.
A final dividend of Rs 44 per share (2200% of face value), expected to be credited in July 2025.

Stock Split and Bonus Shares

In an exciting development, Bajaj Finance announced a 1:2 stock split, meaning that each Rs 2 share will be divided into two Rs 1 shares. Additionally, the company plans to issue bonus shares in a 4:1 ratio, granting shareholders four additional shares for every one they hold.

In conclusion, while Bajaj Finance’s share price may have taken a hit today, the company’s robust performance and strategic announcements indicate a complex landscape for investors. As stakeholders digest these developments, the focus will undoubtedly remain on how Bajaj Finance navigates the challenges ahead.