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Jefferies starts Bajaj Housing Finance at Hold, flags valuation-led upside limits

Our read

Operational delivery should remain strong, but the stock's next leg depends more on sustaining premium valuation than on growth alone.

For operators

Bajaj Housing Finance’s 23% projected AUM CAGR and strong Q1 profit growth reinforce operating momentum, but execution must justify its premium valuation.

Watch

Quarterly AUM growth versus the implied 23% FY26-FY29 CAGR path.

The report,

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 22.6% to Rs 715 crore and total income increased 17% to Rs 3,063 crore.

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07:30 IST · 10 moves · what each means · free

Reported figures

From the report. Source details below

  • Hold rating
  • 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
  • 13.6% ROE projected by FY29

Other figures

  • 2% ROA projected by FY29

Why it matters to operators and investors

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 next

  • 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.

Likely next moves

Our read of what comes next — analysis, not reported by the source.

  • 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.

The counter-case

The case against this reading — not reported by the source.

The Hold call may understate downside if housing-credit growth normalizes, funding costs stay elevated, or competition compresses spreads. A 23% AUM CAGR is not enough to justify premium multiples if incremental growth requires looser underwriting, higher acquisition costs, or lower-yield loans. The reported 22.6% profit growth is backward-looking and could weaken as the loan book seasons and credit costs rise.

The source

Source Read the source at NDTV Profit Published

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