This suggests that the stock price could fall by 21%.
“Bajaj Housing Finance is well-traded (4.7x book value, 39x earnings for FY26), offers downside risk (21% against our FV of Rs. ”, the domestic securities firm said in a report.
Kotak Equities expects Bajaj Housing Finance to grow at a CAGR of 25% from FY24-27 on the back of 24% growth in assets under management, stable profit margins, lower operating expenses and higher credit costs. The company expects to achieve earnings growth of 16% (EPS CAGR). Recent capital increases offset borrowing cost pressures, leading to flat margins and lower leverage while maintaining strong growth.
Therefore, short-term RoE is likely to remain in the 13-14% range, and mid-term ROE is expected to be in the mid-10s.
However, Bajaj Housing Finance, India’s second largest housing finance company with total assets under management of 91,400 billion rupees (FY2024), is targeting high-quality housing mainly for wealthy salaried earners. was also noteworthy. The CAGR is expected to be 24% (FY24-27), with the portfolio consisting of home loans (58%), discounts made up of lease payments (19%), LAP (10%) and developer loans (11%). %). The company has recently expanded into the sub-prime and affordable housing segments. Also read: DMart stock jumps 15% in Q3 update, showing 17% year-over-year revenue growth
Additionally, the company reported strong asset quality performance with a FY24 Gross Stage 3 of 0.3% and low non-retail non-performing loans, setting it apart from larger peers with volatile performance. .
“We expect credit costs to remain modest at 7-17 bps in FY25-27E due to stable arrears and coverage ratios,” said Kotak Equities analyst Nishint Chawate. In addition to focusing on high-income and high-net-worth individuals, the bank said its centralized underwriting process, enhanced by digitalized credit processes and collection teams, has supported low non-performing loans.
Effective execution of business strategies to maintain high growth, risks to NIM due to transition to EBLR and rapid interest rate fluctuations, and fierce competition in the prime segment are identified as major risks to the company’s business. There is.
At around 1:30 pm today, Bajaj Housing Finance share price was trading flat at Rs 126.50.
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