Bajaj Finance, one of India’s top non-bank lenders, recently saw its share price drop sharply after global brokerage firm Citi downgraded it. The stock had been doing well, rising over 30% in 2025, but Citi changed its rating to ‘Neutral’ because it had outperformed the Bank Nifty by 23% this year and 20% in the last 12 months.
Citi’s downgrade was based on several reasons, including a core earnings shortfall in the fourth quarter. Even though net profit rose by 19% compared to last year, the company’s net interest income (NII) and net interest margin (NIM) came in lower than expected.
The NIM decreased by 9 basis points from the previous quarter, and higher credit costs raised worries about future profits.
Additionally, Bajaj Finance’s management lowered its growth predictions for the next fiscal year. The company now expects assets under management (AUM) to grow by 24% to 25%, which is down from the earlier forecast of 25% to 27%.
Investors saw this change along with a fee income growth projection of 13% to 15% as disappointing, since it did not meet expectations.
Citi also cut the price target for Bajaj Finance from ₹10,200 to ₹9,830, reflecting wider market concerns about whether the company’s high valuation can keep going given the slowing growth and margin pressures.
Despite this downgrade, other brokerages like HSBC and Emkay Global remain positive about Bajaj Finance’s future. HSBC kept a ‘Buy’ rating with a price target of ₹10,800, praising the company’s strong earnings and growth potential.
Emkay Global maintained an ‘Add’ rating with a price target of ₹9,200 but lowered its earnings forecasts due to reduced AUM and fee income growth expectations.