Bajaj Finance drops 12% as Bernstein downgrades stock

NEW DELHI: Shares of Bajaj Finance extended their fall to the second straight session on Monday after a global investment advisory firm Bernstein downgraded the non-banking financial major to ‘Underperform’ with the price target of Rs 1,740, citing unsecured consumer finance business models would become challenging in the current pandemic environment.

Amid the current early stage of Covid outbreak in India, Bernstein said that it is uncertain to project how long the physical restrictions from the government would last beyond the 21-days imposed lockdown. At this stage, it would be conservative to assume that first quarter of FY2021 would be a near complete economic freeze and a crawling recovery post that.

Bernstein earlier had ‘Outperform’ rating on Bajaj Finance with a target price of Rs 4,820.


“We believe Bajaj is a risk conscious organisation, which will react by refocusing on collections, risk containment and liquidity management. We expect FY2021 to be a year of consolidation with loan growth recovering marginally only in the second half of FY2021. As things stand now, we estimate the loan growth to be 8 per cent YoY for the FY2021 against 35 per cent YoY run rate,” the foreign firm said.

The shares of the company closed 11.95 per cent lower at Rs 2242.25 on BSE.