Anup Kumar Saha, the Managing Director and Director of Bajaj Finance Ltd, resigned on Tuesday for personal reasons. Jefferies described Saha's departure as surprising, noting that he was only appointed as MD of Bajaj Finance in April, and that his name came up as a candidate for IndusInd Bank CEO.

Key Highlights

• Anup Kumar Saha resigns as Bajaj Finance MD after four months, shortlisted for IndusInd Bank CEO role.
• His departure fuels speculation as IndusInd board considers him among three finalists for its top executive position. 

The foreign brokerage said Bajaj Finance remains one of its top NBFC picks. "Fortunately, its long-time former MD (Rajeev Jain) is there as Executive VC and will now serve as VC and MD until March 28. This and its experienced top management team can make the transition smooth, but succession will be a medium-term deliverable. "Rajeev may reduce his advisory role for Bajaj Finserv," Jefferies said.

According to a few reports, Saha is one of three candidates that IndusInd Bank may have proposed for new CEO, for which the bank must submit recommendations by June 2025.

Even though the events are slightly negative, we believe that the franchise is in a good position to benefit from lower rates, improved asset quality, and an increase in credit demand. We expect a 20% CAGR in profit over FY25-28 and a 19% ROE in FY26. "We look forward to receiving more updates on July 24th, when the company reports its 1QFY26 results." Jefferies maintained its BUY call with a price target of Rs1,044 based on 4.9x the June 27 PB.

Jefferies said Rajeev Jain was the architect of Bajaj Finance's success and served as CEO for over 15 years. He was recently promoted to Executive Vice Chairman, but will now resume his role as MD, becoming Executive VC & MD until his term expires in March 2028.

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"In the case of NBFCs, the CEO/MD is appointed by the board/NRC, and unlike banks, they do not require specific RBI approvals. Given his stature and stakeholder relationships, we anticipate a smooth transition in the near term, with a continued focus on growth, asset quality, and profitability. Rajeev may need to withdraw from any advisory role with Bajaj Finserv," Jefferies said.

According to Jefferies, Jain's availability and the depth of the management team will allow for a smooth transition in the short term; however, in the medium term, Bajaj Fiance may need to find/groom talent to fill the role of CEO/MD.

"We note that Rajeev will be serving his fourth term (16 years), and while bank norms (limiting term to 15 years for non-promoter CEOs) do not apply to NBFCs, the group may consider finding suitable succession options," Jefferies stated.