Bajaj Housing Finance Bags 'Neutral' Rating As Motilal Oswal Initiates Coverage

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Motilal Oswal Report

Bajaj Housing Finance Ltd. has posted strong AUM growth, delivering ~29% AUM CAGR over FY20- FY25, supported by a diversified product suite and robust asset quality. However, we expect a gradual moderation in its AUM growth, given Bajaj Housing Finance’s increasing scale and rising competition from banks.

Bajaj Housing Finance trades at 3.6x FY27 P/BV, and we model AUM/PAT CAGR of ~22% each over FY25-FY28E, with steady-state RoA/RoE of ~2.3%/14.2% in FY28E.

We initiate coverage on Bajaj Housing Finance with a Neutral rating and a target price of Rs 120 (premised on 3.6x Sep’27E P/BV).

Key downside risks include:

1. higher competition in the prime home loan segment,

2. increasing exposure to non-housing loans,

3. NIM pressure from sustained high competitive intensity in the sector, and

4. any slowdown in the real estate or economy.

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