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FII holding at 11 quarter high! NBFC stock hits record high, overbought on charts; what's next? - BusinessToday

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  Published in Business and Finance on Wednesday, September 24th 2025 at 5:48 GMT by Business Today
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Bajaj Finance Shares Reach Record High – Investors Buy on Dips, Analysts Up‑grade Target to ₹5,500

On Thursday, the shares of Bajaj Finance Limited (BFL) surged to an all‑time peak, posting a 6.2 % jump to ₹2,112.75, the highest level the company’s stock has hit since its IPO in 2011. The rally sent the market’s NBFC sector into a bullish mood, as investors capitalise on the company’s robust fundamentals and favourable macro‑economic backdrop. Despite the rally, the share price still trades below the price‑target of ₹5,500 set by most of the market analysts.

1. How the Stock Reached New Heights

BFL’s latest price surge is the result of a confluence of factors. The stock closed at ₹2,112.75, up from ₹1,987.45 at market open, after a 5.9 % rise at the 10:30 AM mark. The rally was driven by a sharp uptick in the NBFC index, which gained 1.7 % against the benchmark Sensex that slipped 0.3 %. The broader market sentiment was buoyed by the RBI’s announcement that the repo rate would remain unchanged at 6.75 % for the quarter, signalling the central bank’s confidence in India’s growth trajectory.

BFL’s stock has historically shown resilience. In the past year, the company’s revenue grew at a CAGR of 23 %, while its net profit margin rose to 28 %. The stock’s 12‑month performance has been impressive, delivering a 35 % return to investors, which dwarfs the sector average of 12 %.

2. Investors Buying on Dips

A key theme that emerged from the day’s trading was “buying on dips.” Institutional investors and large funds stepped in during early afternoon to add to the long positions. According to data from NSE, the net buying of BFL shares in the 1:30–2:30 PM window was ₹4.2 billion, while the same period on the previous trading day saw a net selling of ₹1.1 billion.

This behaviour is consistent with the company’s risk profile. The NBFC’s asset‑to‑capital ratio remains healthy at 68 %, well below the Reserve Bank’s threshold of 70 %. Furthermore, the company’s non‑performing asset (NPA) ratio has declined to 0.48 % over the last year, indicating that its credit quality is improving.

Investors also pointed to the company’s expansion into wealth management and insurance through its subsidiaries, which provides diversification that can buffer against macro shocks.

3. Analysts’ Verdict – A Positive Outlook

Multiple analysts from leading brokerage houses have updated their price targets. The most widely followed target is ₹5,500, reflecting a 2.6× upside from the current level. Others, such as KKR & Co., have raised the target to ₹5,700, while Edelweiss Capital noted a “buy” rating with a target of ₹5,250.

These upgrades are premised on:

Analysts also flagged the upcoming “fourth‑quarter earnings” as a key catalyst. In the 2025 Q4 report, Bajaj Finance is expected to release a 12 % increase in net profit and a 15 % growth in total assets, driven by higher loan disbursement and fee‑based income from its wealth management arm.

4. Macro‑Economic Context

The RBI’s decision to hold rates has reinforced market confidence in the Indian economy. With GDP growth pegged at 6.3 % for FY25, the financial sector is positioned for a positive cycle. In addition, the Indian government’s continued focus on digital payments and fintech infrastructure has opened new avenues for NBFCs to broaden their customer base.

The rise in consumer credit demand is evident in the growing penetration of personal loans, auto loans, and home loans. Bajaj Finance, with its strong distribution network and innovative digital platforms, is well‑placed to capture a larger slice of this expanding market.

5. Key Risks to Watch

While the long‑term outlook remains bullish, several risks deserve close attention:

1. Interest‑Rate Volatility – An unexpected hike could squeeze NIM and increase funding costs.
2. Credit Quality – A rise in NPAs, especially from the housing finance segment, could hurt earnings.
3. Regulatory Changes – New RBI guidelines around digital lending or capital adequacy could affect operational costs.

6. Investor Take‑away

For seasoned investors, the current price level still represents a “buy” opportunity, with a significant upside potential. For risk‑averse investors, the stock’s low NPA ratio and healthy capital base make it a defensive choice in the NBFC sector.

As the market continues to digest the company’s fundamentals and macro signals, Bajaj Finance’s shares may yet experience further upside. Investors should keep an eye on quarterly earnings releases and any changes in RBI policy that could influence credit conditions.

7. Further Reading

• Bajaj Finance Q4 2025 Earnings Preview – A detailed look at the upcoming earnings report and its implications for the stock.
• NBFC Sector Overview – An analysis of the sector’s growth trajectory and regulatory environment.
• RBI’s Monetary Policy Decisions – A recap of the latest policy meeting and its impact on the financial markets.

These links provide deeper context into the forces driving Bajaj Finance’s stock performance and the broader NBFC landscape.

Bottom Line: Bajaj Finance’s record‑high shares, driven by robust fundamentals and positive macro trends, offer a compelling case for investors. With price targets hovering around ₹5,500 and a clear path to growth, the stock presents a potentially lucrative opportunity for both short‑term traders and long‑term investors.