Bajaj Twins Lead Nifty Losers Post Q4 Earnings as Valuation Concerns Surface
Shares of Bajaj Finance Ltd. and Bajaj Finserv Ltd. declined sharply by around 6% each on April 30, emerging as the top losers on the Nifty 50, despite reporting double-digit year-on-year profit growth in their Q4 FY25 results. The unexpected decline in stock prices was largely attributed to valuation concerns and marginal disappointment in certain operating metrics, rather than weak headline numbers.
At 9:43 AM, Bajaj Finance was trading at Rs 8,668, down 4.67%, while Bajaj Finserv quoted Rs 1,945.10, down 5.89% on the NSE. The decline came amid broader market consolidation and caution among investors following recent strong rallies in both stocks. Analysts highlighted that recent optimism had already been priced into valuations, limiting near-term upside and prompting profit booking.
Highlights:
Bajaj Finance down 4.67% to Rs 8,668; Bajaj Finserv down 5.89% to Rs 1,945.10.
Top Nifty losers despite healthy double-digit profit growth.
Valuation stretch and optically boosted profit weigh on sentiment.
Q4FY25 Results: Double-Digit Profit Growth With Mixed Operating Signals
Bajaj Finance reported a 17% rise in consolidated net profit to Rs 4,480 crore in Q4FY25, compared to Rs 3,825 crore in the same period last year. Revenue from operations surged 17% YoY to Rs 18,457 crore, as against Rs 14,927 crore in Q4FY24. However, analysts noted that the bottom-line was optically supported by a Rs 290 crore tax reversal, and the net interest margin (NIM) contracted by ~10 bps QoQ to 9.65%, raising questions on sustainable profitability.
Bajaj Finserv, the holding company, also reported a healthy 14% growth in consolidated net profit at Rs 2,417 crore for Q4, compared to Rs 2,119 crore in the year-ago period. While earnings growth was commendable, investors seemed concerned with future earnings visibility amid slower product-level growth and ongoing regulatory overhang in the NBFC sector.
Highlights:
Bajaj Finance Q4 profit: Rs 4,480 crore (+17% YoY); revenue: Rs 18,457 crore.
Profit aided by Rs 290 crore tax reversal; NIM fell 10 bps QoQ.
Bajaj Finserv Q4 profit: Rs 2,417 crore (+14% YoY).
Brokerages React: Mixed Ratings with Target Prices Between Rs 9,200–10,800
Analyst sentiment was divided on the post-earnings trajectory of Bajaj Finance, with several domestic and global brokerages revising their price targets while maintaining either positive or neutral stances. Emkay Global retained its ‘Add’ rating with a target price of Rs 9,200, noting the quarter was satisfactory in terms of AUM growth, customer acquisition, and operating efficiency, but highlighted elevated credit costs as a drag on profitability.
Jefferies maintained a ‘Buy’ rating, setting a target price of Rs 10,440, stating that core earnings were in line with expectations despite the tax reversal. The brokerage acknowledged that the new CEO’s guidance involved slightly lower near-term growth but deemed the outlook credible for a company of Bajaj Finance’s scale.
HSBC was also bullish, raising its target to Rs 10,800 and tagging Bajaj Finance as a “long-term earnings inflection story”, with 25% CAGR growth projected between FY25 and FY28, along with stable margins through FY26.
However, Motilal Oswal offered a more tempered view, reiterating a ‘Neutral’ stance with a target of Rs 10,000, citing rich valuations and a lack of near-term catalysts to drive re-rating. Citi downgraded the stock to ‘Neutral’, slashing its target to Rs 9,830 from Rs 10,200, flagging a 2.3% credit cost and 9 bps NIM contraction as reasons for a core earnings miss.
Highlights:
Emkay: ‘Add’, TP Rs 9,200; cautious on credit cost.
Jefferies: ‘Buy’, TP Rs 10,440; positive on medium-term outlook.
HSBC: ‘Buy’, TP Rs 10,800; sees 25% CAGR FY25–28.
Motilal Oswal: ‘Neutral’, TP Rs 10,000; valuations seen as stretched.
Citi: Downgraded to ‘Neutral’, TP cut to Rs 9,830 due to NIM drop and higher credit cost.
What’s Behind the Stock Fall: Valuation Excess, Profit Booking, and Cautious Forecast
Despite the strong reported numbers, the recent surge in Bajaj Finance’s stock price over the past four months had led to significant valuation expansion, prompting some investors to book profits following the Q4 show. Analysts like Ajit Mishra of Religare Broking observed that the sharp rally had priced in much of the near-term optimism, leaving little room for immediate upside.
Further, the subtle shift in growth guidance and margin pressure may have added to the caution, especially as the broader NBFC space grapples with regulatory tightening, higher capital costs, and rising provisioning norms. While the company remains fundamentally strong with robust long-term prospects, near-term triggers appear limited, especially for investors chasing aggressive upside.
Highlights:
Stock decline largely driven by profit booking after a four-month rally.
Valuations seen as stretched amid limited near-term upside catalysts.
Operational metrics like NIM compression and credit cost spurred cautious sentiment.
