Bajaj Finance shares decline amidst slowing loan demand signals

Mumbai: Share of Bajaj Finance and its parent Bajaj Finserv tumbled on Tuesday as the lender's guidance signalling a slowdown in loan demand overshadowed an otherwise strong second-quarter performance.

Bajaj Finance's shares fell 7% to close at ₹1,009.10, while Bajaj Finserv slid 5.9% to end at ₹1,992.9. Benchmark Nifty, however, rose 0.5%.

"Although the results for Bajaj Finance were not bad, the management commentary indicated that the loan demand could slow down by 1-2% from the earlier projected figure of 24-25%," said Gaurav Sharma, head of research, Globe Capital. "When Bajaj Finance tumbles, Bajaj Finserv also faces the heat since it is Bajaj Finance's holding company."


Brokerage Emkay Global said, against the backdrop of gradual growth moderation and intensified competition putting pressure on growth and yields, Bajaj Finance's premium valuation multiple versus lending peers is likely to narrow.

So far this year, shares of Bajaj Finance and Bajaj Finserv have surged 45.5% and 26.4%, respectively, while Nifty has gained 8.2%.

"Bajaj Finance is now closer to its fair value and could see some decline in the next few sessions," said Sunny Agrawal, head of Fundamental Equity Research, SBI Securities. "However, most of the negatives are already priced into the stock after the slide in today's session, so no major downsides are anticipated."

Sharma said Bajaj Finance is not expected to extend the slide beyond ₹970 in the short term.