Current Rating and Its Significance
MarketsMOJO currently assigns Bajaj Finance Ltd a 'Buy' rating, reflecting a positive outlook on the stock's potential for investors. This rating indicates that the stock is expected to outperform the broader market over the medium to long term, making it a favourable choice for investors seeking growth within the Non Banking Financial Company (NBFC) sector. The 'Buy' grade is supported by a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals.
Quality Assessment
As of 20 January 2026, Bajaj Finance Ltd maintains an excellent quality grade, underscoring its robust business model and strong operational performance. The company boasts a long-term average Return on Equity (ROE) of 18.15%, signalling efficient capital utilisation and consistent profitability. Operating profit has grown at an impressive annual rate of 26.28%, reflecting sustained growth momentum. Quarterly figures reinforce this strength, with net sales reaching a record ₹20,178.90 crore and PBDIT (Profit Before Depreciation, Interest, and Taxes) hitting ₹13,872.31 crore. Additionally, Profit Before Tax excluding other income stands at ₹6,606.27 crore, having grown at 22.39% annually. These metrics highlight Bajaj Finance’s ability to generate strong earnings and maintain operational excellence.
Valuation Considerations
Despite its strong fundamentals, the stock is currently rated as very expensive in terms of valuation. This reflects the premium investors are willing to pay for Bajaj Finance’s market leadership and growth prospects. The company’s market capitalisation stands at ₹6,04,327 crore, making it the largest player in its sector and accounting for 10.55% of the entire NBFC sector by market cap. Its annual sales of ₹76,194.74 crore represent 3.23% of the industry, further emphasising its dominant position. While the valuation premium may temper upside potential in the short term, it also signals strong investor confidence in the company’s future earnings trajectory.
Financial Trend and Market Performance
The financial trend for Bajaj Finance Ltd remains positive, supported by solid growth in key financial metrics and market-beating returns. As of 20 January 2026, the stock has delivered a 1-year return of 26.82%, significantly outperforming the BSE500 index return of 6.10% over the same period. Shorter-term returns show some volatility, with a 1-month decline of 6.42% and a 3-month drop of 12.74%, but the 6-month return remains slightly positive at 0.15%. Year-to-date, the stock is down 4.40%, reflecting recent market fluctuations. Institutional investors hold a substantial 36.44% stake, indicating strong backing from knowledgeable market participants who typically conduct rigorous fundamental analysis before investing.
Technical Outlook
From a technical perspective, Bajaj Finance Ltd is rated as mildly bullish. This suggests that while the stock shows positive momentum and potential for further gains, some caution is warranted due to recent price corrections. The stock’s day change on 20 January 2026 was -2.88%, reflecting short-term market pressures. However, the overall technical grade supports the 'Buy' rating, indicating that the stock remains in a favourable trend for investors looking to accumulate shares.
Market Position and Sector Influence
Bajaj Finance Ltd’s stature as a large-cap leader in the NBFC sector is a key factor in its rating. Its market cap of over ₹6 lakh crore and significant contribution to sector sales underscore its influence and stability. Being among the top 1% of companies rated by MarketsMOJO across a universe of 4,000 stocks further highlights its exceptional standing. This leadership position provides Bajaj Finance with competitive advantages, including scale, brand recognition, and access to capital, which support its growth and resilience in varying market conditions.
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Implications for Investors
For investors, the 'Buy' rating on Bajaj Finance Ltd suggests a favourable risk-reward profile. The company’s excellent quality metrics and positive financial trends provide a strong foundation for future growth. However, the very expensive valuation grade indicates that investors should be mindful of the premium paid and potential volatility in the near term. The mildly bullish technical outlook supports a strategic entry or accumulation, particularly for those with a medium to long-term investment horizon.
Institutional backing and market leadership further enhance the stock’s appeal, signalling confidence from sophisticated investors. While short-term price movements have shown some weakness, the stock’s long-term fundamentals and sector dominance remain intact, making it a compelling option for investors seeking exposure to the NBFC sector’s growth story.
Summary
In summary, Bajaj Finance Ltd’s current 'Buy' rating by MarketsMOJO, last updated on 17 Mar 2025, reflects a balanced view of strong quality and financial performance tempered by high valuation and moderate technical caution. As of 20 January 2026, the stock continues to demonstrate robust fundamentals, market-beating returns, and a leadership position in its sector, making it a noteworthy consideration for investors aiming to capitalise on growth opportunities within the NBFC space.
Key Metrics at a Glance (As of 20 January 2026)
- Mojo Score: 71.0 (Buy Grade)
- Market Capitalisation: ₹6,04,327 crore
- Return on Equity (ROE): 18.15% (long-term average)
- Operating Profit Growth Rate: 26.28% annually
- Net Sales (Quarterly): ₹20,178.90 crore (highest)
- PBDIT (Quarterly): ₹13,872.31 crore (highest)
- Profit Before Tax (excl. other income, quarterly): ₹6,606.27 crore (22.39% growth)
- Institutional Holdings: 36.44%
- 1-Year Stock Return: +26.82%
- Sector Contribution: 10.55% of NBFC market cap
Conclusion
Bajaj Finance Ltd remains a key player in the NBFC sector with strong fundamentals and a positive outlook. The 'Buy' rating reflects confidence in its ability to deliver shareholder value despite valuation challenges. Investors should consider this rating alongside their own risk tolerance and investment goals when evaluating the stock for their portfolios.
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