Motilal Oswal Financial Services has initiated coverage on Bajaj Finserv with a ‘Neutral’ rating and target price of ₹1,900, implying 11 per cent upside from its previous close. The brokerage believes Bajaj Finserv is entering a phase of broad-based growth as it strengthens its presence across lending, insurance, and emerging financial platforms, with its transition toward a comprehensive, tech-led financial ecosystem.
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Why is Motilal Oswal upbeat on Bajaj Finserv?
Lending arm remains core earnings driver
Bajaj Finance, in which Bajaj Finserv holds a 51.3 per cent stake, continues to anchor the group’s performance, according to Motilal Oswal. The lending business contributes around 54 per cent of revenue (9MFY26) and has built a customer franchise of nearly 110 million users.
The company’s assets under management (AUM) have grown at a 23 per cent compound annual growth rate (CAGR) between FY20 and FY25, reaching about ₹4.8 trillion as of 9MFY26. Analysts note that Bajaj Finance’s strong profitability, high return ratios, and consistent compounding make it the key value driver for the group.
General insurance business shows steady growth
Bajaj General Insurance (BGen), which accounts for 24 per cent of revenue, is India’s third-largest general insurer with a 7.1 per cent market share in FY26 so far.
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Life insurance transitions to value-led growth
Bajaj Allianz Life Insurance (BLife) is undergoing a shift from a unit-linked insurance plan (ULIP)-heavy model to a more balanced product mix. The company has delivered a 28 per cent CAGR in annual premium equivalent (APE) between FY20 and FY25, while improving value of new business (VNB) margins from 9.9 per cent in FY20 to 16.4 per cent in 9MFY26.
Going ahead, Motilal expects VNB growth to outpace APE growth, with projections of 19 per cent CAGR in VNB versus 15 per cent in APE over FY26–28, supported by a stronger focus on protection products and channel expansion.
New-age platforms expand ecosystem reach
Bajaj Finance is also investing in emerging businesses across broking, asset management, financial distribution, healthcare, and technology services. These platforms are designed to be asset-light and scalable, extending the group’s presence across the customer’s financial lifecycle.
Financial outlook and valuation
Analysts expect strong earnings momentum across key verticals, with profit after tax (PAT) from Bajaj Finance, Bajaj General, and value of new business (VNB) from life insurance projected to grow at CAGRs of 28 per cent, 16 per cent, and 19 per cent, respectively, over FY26–28.
At the consolidated level, Bajaj Finserv’s revenue and PAT are estimated to grow at 15 per cent and 17 per cent CAGR, with return on equity (RoE) seen in the 13–14 per cent range.
Premium valuation justified by diversification
The brokerage noted that Bajaj Finserv’s diversified earnings profile, strong balance sheet, and improving contribution from non-lending businesses support a premium valuation for the holding company.
However, with much of the growth already priced in and emerging businesses still scaling up, the current risk-reward remains balanced, leading to a ‘Neutral’ stance on the stock.
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