Jefferies India has identified Bajaj Finance as its top stock pick, projecting a 35% upside from current levels despite the stock's 2.5% year-to-date decline. The report dated October 2, 2026, highlights a ₹17,500 crore capital raise approved by Bajaj Finance's board, comprising ₹11,700 crore through a qualified institutional placement (QIP) and ₹5,800 crore via preferential warrants to Bajaj Finserv, the promoter holding 51%.
The capital raise involves Bajaj Finserv investing 25% of the ₹5,800 crore at the time of warrant allocation, with the remainder due within 18 months. Jefferies notes that the leverage ratio stands at 4.9 times with a retained return on equity (ROE) of 17%. The fundraise aims to support strong loan growth of 23%, staggered monetisation of Bajaj Housing Finance's 87% stake, and management succession planned for March 2028. The move is expected to increase the book value per share by 8%, while earnings per share remain flat and ROE tapers slightly.
This capital infusion comes amid rising funding costs for non-banking financial companies (NBFCs), with AAA and AA+ rated bond yields climbing 29-70 basis points since August 2026. Bajaj Finance, along with peers L&T Finance and HDB Financial Services, has seen weaker bond issuance in the first half of FY27. Despite these headwinds, structural earnings growth of 16-28% is projected for FY27-29, although cost pressures could reduce earnings per share by up to 12%.
Jefferies India’s report underscores Bajaj Finance’s strategic positioning in the NBFC sector, with the capital raise representing about 3% of market capitalization and 13% of estimated FY27 net worth. The next key event will be Bajaj Finance’s FY27 earnings release, which will provide clarity on the impact of the capital raise and funding cost pressures on its financial performance.