Motilal Oswal initiates coverage on Bajaj Finserv with ‘Neutral’ rating; sets target price higher by 11%

Motilal Oswal Securities has initiated coverage on Bajaj Finserv with a ‘Neutral’ rating and a target price of Rs 1,900, up 11 percent from its current price.

The brokerage valued the company at 22x FY28E P/E and highlighted that Bajaj Finserv serves as the holding company for Bajaj Finance (51.3 percent stake), Bajaj Allianz General Insurance (77.3 percent stake), and Bajaj Allianz Life Insurance (77.3 percent stake), offering a diversified financial services platform.

Bajaj Finance, which contributes around 54 percent of 9MFY26 revenue, remains the core value driver for the group, supported by predictable earnings, strong return on equity and sustained compounding.

The general insurance business, contributing about 24 percent of revenue, is expected to deliver a gross written premium (GWP) CAGR of 12 percent over FY26–28, aided by diversified exposure across retail and higher-margin commercial and group health segments, along with continued technology-led efficiency gains.

Meanwhile, the life insurance business, accounting for 22 percent of revenue, is strengthening its position among private insurers through a shift in product mix toward traditional products, expansion of the protection segment, and growth across distribution channels. The brokerage expects APE and VNB to grow at a CAGR of 19 percent and 15 percent, respectively, over FY26–28.

Motilal Oswal noted that emerging businesses currently contribute around 1 percent of revenue and are in the investment phase, but offer long-term potential as they scale toward breakeven and expand the company’s presence across customer financial needs.

The brokerage expects profit after tax from Bajaj Finance and the general insurance business, along with VNB from the life insurance segment, to grow at a CAGR of 28 percent, 16 percent and 19 percent, respectively, over FY26–28. Overall, Bajaj Finserv’s revenue and PAT are projected to grow at a CAGR of 15 percent and 17 percent during the same period, with return on equity in the range of 13–14 percent.