Bajaj Finserv Ltd Upgraded to Hold by MarketsMOJO on Technical and Fundamental Grounds

Technical Trend Shift Spurs Upgrade

The most significant catalyst for the rating upgrade is the change in Bajaj Finserv’s technical grade. The technical trend has transitioned from mildly bearish to sideways, indicating a stabilisation in price momentum after a period of weakness. Key technical indicators present a mixed but improving picture. On the weekly and monthly charts, the Moving Average Convergence Divergence (MACD) remains mildly bearish, yet the Bollinger Bands have turned bullish, suggesting increased volatility with upward bias.

Further, the On-Balance Volume (OBV) indicator is bullish on both weekly and monthly timeframes, signalling accumulation by investors. The Relative Strength Index (RSI) remains neutral with no clear signal, while the Know Sure Thing (KST) oscillator shows bearishness weekly but bullishness monthly, reflecting short-term caution balanced by longer-term optimism. Daily moving averages still lean mildly bearish, but the overall technical summary points to a consolidation phase rather than a downtrend, justifying the upgrade to Hold.

Price action supports this view: Bajaj Finserv’s current price stands at ₹2,059.05, up 0.71% from the previous close of ₹2,044.60, with a 52-week high of ₹2,194.65 and a low of ₹1,733.15. The stock’s recent trading range and positive intraday moves reinforce the sideways technical stance.

Valuation Remains Expensive but Justified by Growth

Bajaj Finserv’s valuation metrics continue to reflect a premium stance. The company trades at a Price to Book (P/B) ratio of 4.3, which is elevated relative to its peers in the finance and NBFC sector. This premium valuation is supported by the company’s robust long-term growth trajectory, with net sales expanding at a compound annual growth rate (CAGR) of 20.59% and operating profit growing at 24.63% annually.

However, the Price/Earnings to Growth (PEG) ratio stands at 2.1, indicating that the stock’s price growth is outpacing earnings growth, which may temper enthusiasm among value-focused investors. Over the past year, Bajaj Finserv’s profits have increased by 16.2%, while the stock price has delivered an 8.75% return, slightly lagging the Sensex’s 10.22% gain over the same period. This divergence suggests that while the company’s fundamentals are solid, market sentiment remains cautious.

Financial Trend: Flat Quarterly Performance Amid Strong Fundamentals

The company reported flat financial results for the quarter ending December 2025, with earnings per share (EPS) at a quarterly low of ₹13.96. Despite this, Bajaj Finserv maintains a strong long-term fundamental profile, boasting an average Return on Equity (ROE) of 12.74%, which is respectable within the holding company sector.

One area of concern is the debt-equity ratio, which has risen to a high of 5.13 times as of the half-year mark, signalling increased leverage. While this elevated debt level could pose risks if interest rates rise or credit conditions tighten, the company’s promoters remain the majority shareholders, providing a degree of stability and confidence in governance.

Long-term returns have been impressive, with the stock delivering a 5-year return of 101.90% and a remarkable 10-year return of 1,099.32%, far outpacing the Sensex’s 63.15% and 254.07% respectively. This track record underpins the Hold rating, reflecting confidence in the company’s ability to generate shareholder value over time despite short-term fluctuations.

Quality Assessment: Steady but Not Outstanding

Bajaj Finserv’s quality grade remains moderate, with a Mojo Score of 50.0 and a Mojo Grade of Hold, upgraded from Sell. This score reflects a balance between the company’s solid fundamentals and the challenges posed by valuation and leverage. The company’s consistent growth in net sales and operating profit, combined with a stable ROE, supports the quality assessment, but the flat recent quarterly performance and high debt levels prevent a stronger rating.

Investors should note that the company’s industry positioning within the finance and NBFC sector provides resilience, but also exposes it to regulatory and macroeconomic risks that could impact future earnings trends.

Comparative Returns and Market Context

When compared to the broader market, Bajaj Finserv has outperformed the Sensex over multiple time horizons, particularly in the medium to long term. The stock’s 3-year return of 45.63% surpasses the Sensex’s 37.26%, and its 5-year return of 101.90% is significantly higher than the Sensex’s 63.15%. This outperformance highlights the company’s ability to deliver value despite recent flat quarters.

Shorter-term returns are more modest, with a 1-year return of 8.75% trailing the Sensex’s 10.22%, and a year-to-date return of 0.99% compared to the Sensex’s negative 1.74%. These figures suggest that while the stock remains a solid long-term holding, investors should temper expectations for near-term gains amid market volatility and sector-specific headwinds.

Conclusion: A Balanced Hold Recommendation

The upgrade of Bajaj Finserv Ltd’s investment rating to Hold reflects a balanced assessment of its current position. The technical indicators have improved sufficiently to remove the previous Sell rating, signalling a stabilisation in price action and investor sentiment. Meanwhile, the company’s fundamental strength, demonstrated by steady long-term growth and a respectable ROE, supports a cautious but positive outlook.

However, the flat quarterly results, elevated debt levels, and premium valuation metrics counsel prudence. Investors should monitor upcoming earnings releases and macroeconomic developments closely, as these factors will influence whether the stock can transition from Hold to a more bullish rating in the future.

Overall, Bajaj Finserv remains a key player in the holding company sector with a solid track record, but current conditions warrant a measured approach, favouring Hold over more aggressive Buy recommendations.

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