Bajaj Finserv Maintains Neutral Rating with Target Price of Rs 1900: Motilal Oswal

Bajaj Finserv Research Report

Company Overview Bajaj Finserv (BJFIN), the holding company of India's largest non-banking finance company (NBFC), Bajaj Finance (BAF), and several other key financial services entities. The group aims to create a comprehensive, technology-led financial services ecosystem across lending, insurance, investments, and healthcare.

Lending Business Bajaj Finance (BAF) is the core value contributor, providing ~110 million customers (accounting for 54% of revenue in 9MFY26) with predictable earnings, strong return on equity (ROE), and sustained compounding. The asset under management (AUM) has grown at a compound annual growth rate (CAGR) of 23% from FY20-25, reaching INR4.8 trillion at the end of 9MFY26.

Insurance Business Bajaj General (BGen), with a 24% stake in 9MFY26 revenue, is India's third-largest general insurer with a 7.1% year-to-date (YTDFY26) market share. BGen is one of the most profitable general insurers, with a 9MFY26 combined ratio of 100.8%. The business is well-positioned to achieve a gross written premium (GWP) CAGR of 12% during FY26-28, while maintaining best-in-class combined ratios.

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Outlook We expect PAT from established businesses - BAF and BGen, and value of new business (VNB) of BLife to grow steadily at a FY26-28 CAGR of 28%/16%/19%, respectively. Emerging businesses are expected to gradually move toward breakeven as they scale up. BJFIN's revenue/PAT is expected to clock a CAGR of 15%/17% in FY26-28, with a ROE in the range of 13-14%.

Recommendation Based on the sum-of-the-parts (SoTP) valuation, we arrive at a target price of INR1,900, implying a FY28E price-to-earnings (P/E) ratio of 22x. We initiate with a NEUTRAL rating.