Jefferies starts Bajaj Housing Finance at Hold, flags valuation-led upside limits
Jefferies initiated coverage with a ₹92 target, citing premium valuations despite projected 23% AUM CAGR for FY26–FY29. Bajaj Housing Finance reported Q1 FY27 net profit of ₹715 crore, up 22.6% year on year.
What happened
Jefferies initiated Bajaj Housing Finance at Hold with a Rs 92 target, citing premium valuations despite strong growth and asset quality. Q1 FY27 profit rose
Key facts
- Hold rating
- Price target: Rs 92
- 2.6x Mar-2027 estimated book value
- 24x Mar-2027 estimated EPS
- 23% AUM CAGR projected for FY26-FY29
- 20% EPS CAGR projected for FY26-FY29
- 2% ROA projected by FY29
- 13.6% ROE projected by FY29
- Q1 FY27 net profit: Rs 715 crore, up 22.6%
- Q1 FY27 total income: Rs 3,063 crore, up 17%
Why this matters
The company’s premium market valuation could support strategic flexibility, though limited near-term upside raises the bar for acquisitions or expansion investments to be value-accretive.
What to watch
- Quarterly AUM growth versus the implied 23% FY26-FY29 CAGR path.
- Net interest margin and borrowing-cost movement as interest-rate conditions evolve.
- Gross and net NPA trends, early delinquencies and credit-cost guidance.
- Disbursement mix between prime housing, loan against property and higher-yield segments.
- Price-to-book and price-to-earnings premium versus listed housing-finance and diversified NBFC peers.
- Evidence of intensified pricing competition from banks, NBFCs and other housing-finance companies.
- Prioritize profitable home-loan growth over aggressive market-share gains to defend return metrics.
- Maintain underwriting discipline in higher-yield segments as the loan book scales.
- Use parent Bajaj ecosystem distribution and cross-sell to lower customer-acquisition costs.
- Communicate margin, cost-to-income and credit-cost trends clearly to support valuation credibility.
- Avoid pricing actions that materially dilute spreads merely to defend growth targets.