Synopsis: Bajaj Housing Finance Company shares are in focus after the company announced its financial results for this quarter. Motilal Oswal expects the stock to rise by a minor 10 percent in the future as it sees multiple risks.
The shares of the second-largest housing finance company (HFC) in India are in focus after Motilal Oswal gave key insights about the company. In this article, we will dive more into the details of it.
With a market capitalization of Rs 91,239 crore, the shares of Bajaj Housing Finance Ltd are currently trading at Rs 109 per share, down by 0.35 percent from its previous day’s closing price of Rs 109.38 per share. Post its listing on the stock market in September 2024, the stock has corrected by over 33 percent.
Analyst Comments
Leading domestic brokerage, Motilal Oswal, has maintained a “Neutral” rating on the stock and has fixed a target price of Rs 120 per share, signalling an upside potential of just 10 percent from its current market price.
Motilal Oswal cited that Bajaj Housing Finance reported a stellar performance in Q2, despite a tightening of competition in the financing of residential properties. The company recorded excellent growth of both AUM and loan disbursements across all the product segments.
Besides that, the enterprise succeeded in keeping its profit margins intact amid a scenario of declining lending rates. At the same time, it continues to present strong asset quality, which implies that the borrower pool is mostly in a timely repayment pattern.
Motilal Oswal has a positive view of Bajaj Housing Finance as a robust and competent player on the market who can withstand the pressure of increased competition and a period of lower-interest rates, while at the same time keeping its growth and profits at a steady level.
Nevertheless, the brokerage in its disclosure also warned of various potential risks, like the possibility of slower loan growth, margin enhancement being limited due to aggressive pricing by competitors, and asset quality worsening if the company were to venture more into non-prime (riskier) loan segments.
Looking forward, the brokerage is optimistic about Bajaj Housing Finance’s loans and profits growth, which would be around 22 percent annually over FY25-28, RoA at 2.3 percent, and RoE at 14.2 percent by FY28.
Q2 Highlights
Bajaj Housing Finance reported a net interest income of Rs 956 crore in Q2 FY26, representing a robust 34 percent growth from Rs 713 crore in Q2 FY25. Coming to its profitability front, it reported a net profit growth of 18 percent to Rs 643 crore in Q2 FY26 as compared to Rs 546 crore in Q2 FY25.
Additionally, it reported a robust disbursement of Rs 15,914 crore in Q2 FY26, a growth of 32 percent as compared to Rs 12,014 crore in Q2 FY25. Regarding its total Assets Under Management (AUM), it reported a total AUM of Rs 1,26,749 crore in Q2 FY26, a growth of 24 percent as compared to Rs 1,02,569 crore in Q2 FY25.
It has one of the sector’s best asset qualities. Its GNPA declined by 3 bps to 0.26 percent as compared to 0.29 percent in Q2 FY25. Also, NNPA stayed flat and currently stands at 0.12 percent during the quarter. However, its credit costs increased by 16 bps to 0.18 percent in this quarter from 0.02 percent in Q2 FY25.
Bajaj Housing Finance Limited (BHFL) is a provider of home loans and commercial property loans. The company also offers a loan against property to meet personal or business requirements, apart from developer funding for construction projects. Besides these, BHFL has the facility of lease rental discounting and working capital loans to fuel the business growth.
Written by Satyajeet Mukherjee
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