ICICI Securities believes Bajaj Housing Finance's differentiated strategy, diversified product mix, and digital adoption position it well to sustain 21–23% AUM CAGR and deliver superior returns. Key risks include competitive pressure on spreads and any adverse movement in credit costs.
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ICICI Securities Report
ICICI Securities has reiterated its 'Buy' rating on Bajaj Housing Finance Ltd. with an unchanged target price of Rs 125, implying a 30% upside from the current market price of Rs 96.
The brokerage highlights Bajaj Housing Finance's strong growth trajectory, operational efficiency, and robust asset quality as key drivers for sustained outperformance.
Bajaj Housing Finance is among the fastest growing HFCs in India – 29% AUM CAGR between FY20-25 vs similar-sized peers' growth declining and larger peer growing at 8% during the same period.
Its market share increased to 1.6% by FY25 from 1% in FY20.
Taking cognisance of its diverse product offerings (home loan, lease rental discounting, developers finance and loan-against-property) serving all customer segments (prime and non-prime), it aims to improve its home loan origination market share to 5% from current level of 2.5-2.7%.
While Bajaj Housing Finance's focus remains on outpacing industry growth (14-16% CAGR till FY28), it emphasises on operating efficiency and credit quality.
It expects opex to NTI to moderate to 14-15% over the medium term from the current level of 20%.
Maintain Buy with an unchanged target price of Rs 125, valuing the stock at 4x FY27E P/B.
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