Bajaj Finserv shares rise 2%. Why Jefferies initiated coverage on Nifty stock

Shares of Bajaj Group’s holding company, Bajaj Finser,v rallied 2% to Rs 1,998.75 on Thursday morning after global brokerage Jefferies initiated coverage on the blue-chip Nifty stock with a ‘buy’ rating and a target price of Rs 2,420, noting that the entry of Jio Financial will have a limited impact.

“Bajaj Finserv, the holding company of the group’s financial businesses, is poised to benefit from the tailwinds of lower rates at Bajaj Finance (BAF), improving profitability at Bajaj Allianz Life Insurance (BALIC), and profitable growth/motor TP hike at Bajaj Allianz General Insurance (BAGIC). New ventures like mutual funds, healthcare, tech, and ventures can add option value. We see limited impact from the exit of Allianz and the entry of Jio FS,” Jefferies said in a report.

The brokerage expects core earnings to grow at a CAGR of 22% during FY25–28.


Bajaj Finserv holds a 51% stake in Bajaj Finance, 74% in BAGIC, and 74% in BALIC.

“BFS is also investing in new ventures such as Bajaj Asset Management, Bajaj Finserv Health, and Bajaj Finserv Direct. These businesses are currently small and loss-making due to lower scale. We value the AMC stake at Rs 26 billion (Rs 16 per share), based on 4% of Sep-27 AUM. While we don’t assign an explicit valuation to healthcare and other early-stage businesses, the opportunity in these segments is significant and can be leveraged through execution and cross-selling,” Jefferies added.

The brokerage estimates Bajaj Finance’s loan book to grow at 23% CAGR over FY25–28, aided by margin improvement from lower rates. BAGIC’s profits are expected to grow at a 14% CAGR, while BALIC’s value of new business (VNB) margin is projected to expand at a 23% CAGR.

“BFS is well-positioned to leverage its lending and non-lending platforms and is relatively insulated from economic cycles. Upside can come from lower credit costs at BAF, a motor TP hike for BAGIC, better profitability at BALIC, and expansion of tie-ups for Bajaj Health and Bajaj Direct,” Jefferies said.

In insurance, the Bajaj Group and Allianz have ended their 74:26 partnership. Post this, Bajaj Finserv’s stake will rise to 75%, with the balance shifting to a group company.