Bajaj Finance shares up 30% in 2025 so far. Can GST reform tailwinds push the stock past Rs 1,000?

Bajaj Finance shares have surged 30.5% so far this year, drawing investor attention as potential Goods and Services Tax (GST) cuts on consumer durables and India’s first sovereign credit rating upgrade in nearly two decades promise to boost lending volumes and margins.

Analysts say the stock is well positioned to benefit from lower EMIs, cheaper offshore funding, and renewed retail demand, with several projecting that these tailwinds could push the stock past the Rs 1,000 mark, prompting questions for investors on whether now is the right time to buy.

GST and credit rating boost

Analysts say Bajaj Finance stands to gain directly if the government follows through on proposals to lower GST on consumer durables, which would cut monthly installment costs and expand lending volumes in its key financing segments.

Prime Minister Narendra Modi last week announced a plan to lower GST rates on several categories of goods and services by Diwali, India’s peak shopping season. Reuters reported that proposals include cutting GST on small cars to 18% from 28% and on health and life insurance premiums to as low as 5% or even zero.

“EMI obligation for consumer durables should reduce, benefitting NBFC lending in this segment,” Motilal Oswal noted, naming Bajaj Finance among top stock beneficiaries from GST rationalization.

The rally is also underpinned by S&P Global Ratings’ decision to lift India’s long-term sovereign credit rating to “BBB” from “BBB-,” the first upgrade in 18 years. Motilal Oswal said financial companies such as Bajaj Finance could see a 15–20 basis point reduction in coupon payments on offshore borrowings.

“Indian financial companies, such as Bajaj Finance, accessing the ECB market could see a 15–20bp reduction on their coupon payments,” the brokerage said, adding that lower funding costs would support lending margins and strengthen Bajaj Housing Finance’s expansion in mortgages.

Technical picture

From a technical standpoint, Bajaj Finance is trading above five of its eight key simple moving averages (SMAs), including the 5-day, 10-day, 20-day, 150-day and 200-day, but remains below the 30-day, 50-day and 100-day averages. The stock’s Relative Strength Index stands at 36.4, while the MACD at -16.9 remains below both the center and signal lines, signaling caution despite its ongoing rally.

Nilesh Jain, Head of Technical and Derivatives Research at Centrum Broking, said that Bajaj Finance has immediate support at 850 and resistance at 930. "The overall trend looks positive in the near term, with potential upside towards 970. Momentum indicators and oscillators have also turned upward from oversold levels, with RSI currently at 55. The stock can be accumulated in a staggered manner as a positional trade,” said Jain.

Ajit Mishra, SVP, Research at Religare Broking, said "the chart of Bajaj Finance shows a strong rebound today, supported by rising volumes, reclaiming the 20-day moving average (around Rs 890) while comfortably holding above the 100-day (Rs 840) and 200-day (Rs 780) averages, which indicates the medium-term trend remains bullish. In the near term, the stock faces key resistance at Rs 925–950 zone, with a breakout above this zone opening the path towards a new high.”

Broader outlook

Amit Trivedi, Sr. Vice President, Institutional Research at YES Securities, said that Bajaj Finance is firmly positioned in an uptrend. "After multi month decline from record highs, the stock found support around the 850 zone. Subsequent recovery has been backed by bullish candles and higher volumes, driving prices back above 900 levels.”

Trivedi said that as long as the Rs 820–850 support holds, the stock is poised to scale higher, with the next target zone projected around Rs 1,020.

Amruta Shinde, Research Analyst at Choice Broking, pointed to the 200-day EMA near Rs 850 as a key base. “A decisive move above Rs 920 would provide an ideal entry point for long positions, with an anticipated upside target in the range of Rs 1,000–1,060,” Shinde said, adding that momentum indicators reinforce the positive outlook with RSI trending higher and the MACD giving a bullish crossover.

Kunal Kamble, Sr. Technical Research Analyst at Bonanza, said the near-term resistance for the stock is placed at 950, and "we can expect it to move towards this level,” noting that support lies between Rs 850–820.

“The current MACD setup on the daily time frame is showing signs of a crossover, indicating the possibility of positive momentum in the near term,” said Kamble.

Also read | Paytm shares up 17% so far in 2025. Should you ride the rally or wait for a dip?

Fundamental drivers

Nitin Jain, Sr. Research Analyst at Bonanza, said proposed GST cuts on consumer durables “will make products more affordable, driving demand and sales. This is highly positive for Bajaj Finance, as its lending to the consumer durable segment is a major profit contributor, and rising volumes should boost its retail loan growth and potentially improve asset quality.”

On borrowing costs, Jain said that lower offshore borrowing costs could meaningfully boost margins for Bajaj Finance, though the impact may be moderate. He noted that reduced funding expenses would strengthen lending margins, particularly across consumer durables, mortgages, and unsecured retail loans.

Looking ahead, Jain said reforms could materially improve FY26 earnings. “Lower GST rates on consumer durables (from 28% to 18%) will likely expand retail loan demand and portfolio growth, as EMIs on financed goods drop and affordability improves. Eased offshore borrowing costs, thanks to India’s credit rating upgrade, can directly boost margins by reducing funding expenses.”

“There are strong tailwinds for the market with potential to take it higher. The prime minister’s declaration on the next phase of GST reforms by Diwali is a major positive. The expectation is that most goods and services will fall into the 5% and 18% brackets,” said Dr. V.K. Vijayakumar of Geojit Investments.

Also read | Rs 2.4 lakh crore GST boost! Jefferies, Morgan Stanley decode impact on stocks, economy

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times).