Jefferies has initiated its coverage for Bajaj Housing Finance Ltd. with a 'hold' rating with a price target of Rs 92 after noting healthy growth in assets under management at premium valuations.
However, it underlined that the premium valuation can limit upside for the stock.
"It trades at 2.6x Mar-27e BV and 24x Mar-27e EPS, at a premium to most HFC peers. While superior growth, better scalability and pristine asset quality warrant a premium, we see limited room for further re-rating," Jefferies said.
Bajaj Housing Finance is India's second largest HFC and is expected to deliver a peer leading 23% AUM Compound Annual Growth Rate over fiscal 2026 to 2029.
Jefferies sees spreads moderating and bottoming out in fiscal year 2027, while operating leverage and lower credit costs may cushion earnings.
Asset quality is best in class with lowest GS3 (Gross Stage 3) among peers, Jefferies underscored, adding that it expects Bajaj Housing to deliver 20% Earnings per share (EPS) CAGR over FY26-29 along with 2% return on assets and 13.6% return on equity by FY29.
"While superior growth, better scalability and pristine asset quality warrant a premium, we see limited room for further re-rating. Our PT is Rs92, based on 2.4x Sept 28e BV (slight premium to AHFCs with similar growth), implies limited upside potential. Thus, we initiate with Hold rating," the brokerage highlighted.
Bajaj Housing Finance Q1 FY27 Highlights
Bajaj Housing Finance Ltd.'s net profit saw a 22.6% uptick to Rs 715 crore, according to financial results data for the first quarter of fiscal 2027. The profit stood at Rs 583 crore in the preceding financial year.
The firm's total income was up 17% to Rs 3,063 crore, compared to Rs 2,616 crore in the previous fiscal.
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