Bajaj Housing Finance maintains one of the strongest asset quality profiles among its peers, driven by its strategic focus on large, prime-ticket loans, coupled with stringent underwriting standards and prudent risk management practices.
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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:
higher competition in the prime home loan segment,
increasing exposure to non-housing loans,
NIM pressure from sustained high competitive intensity in the sector, and
any slowdown in the real estate or economy.
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