Bajaj Finance Ltd FALL 3% DESPITE STRONG Q2

Shares of Bajaj Finance Ltd fell nearly 3 percent on Wednesday as investors assessed the company's September-quarter performance amid concerns over margin pressure from rising interest rates. Despite the stock's decline, brokerages maintained positive ratings, with price targets of up to Rs 1,300. Bajaj Finance reported a 29 percent year-on-year increase in net profit to Rs 6,367 crore in Q2FY27. Net interest income (NII) rose 24 percent to Rs 13,335 crore, compared with Rs 10,785 crore in the corresponding quarter last year. Assets under management (AUM) expanded 26 percent to Rs 5.85 lakh crore. The brokerage outlook remained constructive, with analysts highlighting several levers to counter revenue headwinds and protect return on assets (RoA) and return on equity (RoE) over FY28–FY29. A potential capital raise could also support the company's growth plans and profitability. AUM growth accelerated to 26 percent year-on-year in Q2FY27, up from 24 percent in the first quarter. The company also raised its FY27 AUM growth guidance by 3–4 percentage points to 26–27 percent. Pre-provision operating profit (PPoP) came in slightly above estimates, while the net slippage ratio declined by 110 basis points year-on-year, signalling an improvement in asset quality. However, CLSA noted that interest rate swaps had helped contain funding costs, while management had flagged potential margin pressure from interest rate hikes. The brokerage also highlighted plans for an equity raise to finance growth and address leverage exceeding five times. CLSA added that the company had yet to provide specific details on how it would offset the impact of changes in insurance guidelines, leaving investors to monitor the potential implications for future profitability.