Bajaj Housing Finance Plunges to Record Low Near IPO Price

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AuthorIshaan Verma|Published at:
Bajaj Housing Finance Plunges to Record Low Near IPO Price
Overview

Bajaj Housing Finance shares have dropped to an all-time low of ₹76.29, close to their IPO price, as a sharp downtrend continues. Even with a reported 21% year-on-year profit increase to ₹665 crore and a 24% rise in total income for Q3 FY26, market sentiment is strongly negative. Analysts are cautious due to valuation gaps and technical challenges, despite some higher price targets.

Record Low and IPO Proximity

Bajaj Housing Finance shares have entered a steep, sustained downtrend. Friday saw the stock plunge nearly 4% to ₹76.29 on the National Stock Exchange (NSE). This dramatic fall places the shares under 10% from its IPO price of ₹70.

Erasing Listing Gains

Since hitting a record high of ₹188.50 on September 18, 2024, shortly after its listing, Bajaj Housing Finance stock has lost over 60% of its value. The shares have now erased over 85% of their post-debut gains. The stock had listed at ₹150, a 114% jump over the IPO price.

JM Financial Begins Coverage Cautiously

Brokerage firm JM Financial has initiated coverage on Bajaj Housing Finance, assigning an 'Add' rating and a ₹88 target price. This valuation, based on 2.5 times estimated FY28 book value per share (BVPS), suggests limited near-term upside. It is similar to the 2.3x FY28E BVPS multiple seen in peers. However, the firm noted the company's leading metrics.

Strategic Strengths and Efficiency

JM Financial believes Bajaj Housing Finance can defend its net interest margins (NIMs) despite strong competition and rising NBFC yields. Key strengths include its strong parentage from Bajaj Finance, successful refinancing of costly debt, and growth in high-yield areas. Operating efficiency has also improved, driven by lower employee costs, strong operating leverage from rapid Assets Under Management (AUM) growth, and strategic tech investments.

Growth Prospects and Asset Quality

Asset quality is a strong suit, with average credit costs around 14 basis points from FY23 to 9MFY25. JM Financial forecasts a 20% compound annual growth rate (CAGR) for earnings per share (EPS) between FY26 and FY28E. This growth is projected from a diversified portfolio, stable margins averaging 2.9%, an improving cost-to-income ratio, and careful credit cost management. The firm anticipates a consistent Return on Assets (RoA) of 2% and Return on Equity (RoE) of 13-14% through FY28E.

Bajaj Housing Finance Overview

Established in 2008, Bajaj Housing Finance is a subsidiary of Bajaj Finance and ranks as India's second-largest housing finance company, after LIC Housing Finance. It offers a comprehensive suite of mortgage products. For its Q3FY26 results, the company reported a 6% year-on-year decline in consolidated net profit to ₹4,066 crore. Total income, however, rose over 15% year-on-year to ₹21,215 crore. Assets under management reached ₹4,88,477 crore by quarter-end.

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