Shares of Bajaj Finance dropped 8 percent to Rs 2,126 apiece on Tuesday after global brokerage UBS downgraded the stock to 'sell'. The brokerage also sharply revised the Bajaj Finance share price target to Rs 1,600 from a previous target of Rs 4,600 while slashing the stock's EPS estimates by 11-65 percent for FY21-22.

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In a note, the UBS said loan growth and asset quality of the financial system will be affected as the economic recovery in the services sector is expected to remain gradual and the lockdown is also likely to extend longer than May 3. The moratorium relief will also play a role in the loss of loan discipline for banks, it said.

It also carried out a review of several financial stocks, downgrading its rating in several cases. UBS also cut HDFC's price target to Rs 2,100 from Rs 2,850 while Shriram Transport Finance has been reduced to Rs 1,000 from Rs 1,650 earlier. UBS also downgraded Ujjivan to neutral and lowered its price target to Rs 200 from Rs 450 per share.

Earlier in April, Bajaj Finance announced that it has lost 3.5 lakh accounts and Rs 4750 crore worth of assets under management in the last 10 days of March after the nationwide lockdown was announced. It said that it expects demand to revive by July and business to normalise by October.

During Q4, the company acquired 1.9 million new customers to 42.6 million. However, it added that had it not been for lockdown, the company could have added another 350,000 more customers taking the total new customer count to 2.25 million for Q4, the company said.

The NBFC reported a mere 2 percent growth in its asset under management to Rs 1.47 lakh crore at the end of March as against Rs 1.45 lakh crore in the previous quarter. The growth in AUM had slowed to 27 percent year-on-year compared to 40 percent during the corresponding quarter last year.

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