Bajaj Housing Finance has captured the attention of investors with its remarkable rise in the share market. After an overwhelming response in the primary market and a strong debut on the stock exchanges, the stock price soared 159% above its issue price of Rs 70, reaching Rs 181. Analysts remain bullish, projecting an additional 24% upside, making Bajaj Housing Finance a hot share market investment option.
Strong management and growth potential
Brokerages have expressed confidence in the company’s growth potential, with several initiating ‘buy’ calls. Bajaj Housing Finance’s management is being lauded for its ability to position the company as a strong competitor to HDFC. The firm's asset quality and assets under management (AUM) growth have also outpaced peers, further strengthening its outlook.
Narinder Wadhwa, Managing Director of SKI Capital, has set a target price of Rs 225, driven by confidence in Bajaj Housing Finance’s future earnings and growth trajectory. Wadhwa believes the company could benefit from the recent HDFC-HDFC Bank merger, which may allow it to tap into the lucrative land financing market previously dominated by HDFC. With such potential, the stock continues to attract share market investment interest.
Phillip Capital’s optimistic outlook
Adding to the bullish sentiment, Phillip Capital projects a 16% upside for Bajaj Housing Finance. The firm points to the company’s popular loan size of Rs 50 lakh, which covers 65% of home loan originations in India, as a game-changer. They predict that Bajaj Housing Finance’s balance sheet could expand to Rs 2 lakh crore over the next three years, significantly increasing its valuation.
Are premium valuations justified?
Following its listing, Bajaj Housing Finance traded at a price-to-book (PB) ratio of 5.2x, considerably higher than competitors like Home First Finance (3.6x), Aptus Home Finance (3.3x), Aavas Financiers (2.8x), Aadhar Housing Finance (2.4x), and LIC Housing Finance (1x). While these premium valuations reflect investor confidence, they raise the question of whether the company can sustain such a high trajectory in the long term.
Nevertheless, with a robust management team, solid AUM growth, and favourable market dynamics, Bajaj Housing Finance continues to be an attractive share market investment opportunity.
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