Cash News
Bajaj Housing Finance Ltd (BHFL) tumbled 9 per cent in Wednesday’s trade amid profit booking on the counter, following its 169 per cent surge over the IPO issue price of Rs 70 apiece.
The scrip, which got listed on stock exchanges on Monday, plunged 9.17 per cent to hit a low of Rs 171.16 from day’s high of Rs 188.45 level on BSE. The Bajaj Housing Finance IPO ran from September 9 to September 11 and attracted bids worth Rs 3 lakh crore. Adding to the optimism was an initiation report on the stock by PhillipCapital, which valued the Bajaj Housing Finance stock at 6.5 times September 2026 book value and suggested a target price of Rs 210.
The housing finance company in fact commanded a market capitalisation (m-cap) over Rs 1.5 lakh crore, which was higher than 10 pure-play HFC listed in India, including Aadhar Housing, LIC Housing, Aavas Financiers and Aptus Value. After Wednesday’s fall, Bajaj Housing Finance’s m-cap has fallen to Rs 1.44 lakh crore.
Prashanth Tapse, Senior VP (Research) at Mehta Equities had recommended conservative investors to book profits post the stock listing, as listing gains were over and above his expectations. Long term investors can continue holding the stock for long term growth as the sector outlook remains optimistic given the company’s well-positioned business model, he said.
PhillipCapital believes the BHFL is in a league of its own, with its focus on the ‘desirable’ sweet spot for many home loan (HL) aspirants with a ticket size of Rs 50 lakh.
“This way, it addresses c.65 per cent of home-loan originations in India. It is increasingly focusing on Lease Rental Discounting (LRD), a high-yield segment that provides operating leverage with scale. The CF (construction finance) book will be range-bound at 8-10 per cent of its total book. In three years, BHFL is likely to have a balance sheet of Rs 2 lakh crore,” teh brokerage said.
PhillipCapital expects credit costs for BHFL may remain benign in the near-term. This, along with its focus on building a low-risk balance sheet, will lead to RoA and RoE of 2 per cent and 12per cent, respectively, PhillipCapital said.
“BHFL has scope to improve its expense ratios, implying an improvement in return ratios. Hence, we would look favourably at BHFL for its acute focus on salaried HL, steady expense ratio, and benign credit costs, manifesting strong return ratios,” it said.
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