Jefferies has initiated coverage for Bajaj Housing Finance Ltd. with a 'hold' rating and a price target of ₹92. According to reports from Jefferies, the brokerage noted healthy growth in assets under management but highlighted that premium valuations can limit upside potential for the stock. The company trades at 2.6x Mar-27e book value and 24x Mar-27e earnings per share, representing a premium to most housing finance company peers. As per Jefferies, while superior growth, better scalability and pristine asset quality warrant a premium, the brokerage sees limited room for further re-rating given the current valuation levels. The ₹92 target implies just 8% upside from Wednesday's closing levels of ₹85.66, with the valuation being the central constraint in an otherwise robust investment case.
Bajaj Housing Finance is positioned as India's second largest housing finance company and is expected to deliver a peer-leading 23% AUM compound annual growth rate over fiscal 2026 to 2029. As reported by Jefferies, the company's superior growth, better scalability, and pristine asset quality warrant a premium valuation, though limited room for further re-rating exists. The brokerage expects the company to deliver 20% earnings per share CAGR over FY26-29 along with 2% return on assets and 13.6% return on equity by FY29. Jefferies forecasts net profit to rise from ₹2,570 crore in FY26 to ₹4,430 crore by FY29. The lender, 86.7% owned by Bajaj Finance, had assets under management of about ₹1.5 lakh crore as of June 2026 and is expected to reach almost ₹2.6 lakh crore by FY29. The company's home-loan book stood at ₹80,900 crore, accounting for 54% of AUM, while lease rental discounting contributed 23.1%, developer financing 11.4% and loans against property 10.3%.
According to Jefferies, Bajaj Housing Finance maintains best-in-class asset quality with gross Stage 3 loans at 0.29% and Stage 2 loans at 0.32% as of June 2026, among the lowest across housing finance peers. The brokerage expects spreads to moderate and bottom out in fiscal year 2027, while operating leverage and lower credit costs may cushion earnings. Home loans and lease-rental discounting reported no gross bad loans, while developer finance had negligible stress. Jefferies expects credit costs to remain at about 13 basis points annually over FY27-FY29, compared with 17 basis points in FY26. The company's sourcing network includes relationships with 608 developers and more than 9,800 approved project finance developments, which act as a funnel for housing loans. Home-loan customers are predominantly salaried at 83%, while around 78% have a credit score of 750 or above.
Bajaj Housing Finance reported strong financial results for the first quarter of fiscal 2027, with net profit increasing 22.6% to ₹715 crore compared to ₹583 crore in the preceding financial year. As reported by Jefferies, the company's total income grew 17% to ₹3,063 crore, up from ₹2,616 crore in the previous fiscal year. AUM increased 24% year-on-year in the June quarter as disbursements climbed 30%, with management guiding for medium-term AUM growth of 24%-26%, including 21%-23% in FY27. The company's operating expenses as a share of AUM have declined to about 0.8% from roughly 1% over FY22-FY26, with Jefferies expecting the ratio to fall to 0.64% by FY28.
Bajaj Housing's spreads have declined by 23 basis points since September 2025, largely due to lower yields following rate cuts and the company's 35% fixed-liability base. Management has guided for a 20-25 basis point YoY decline in spreads in FY27 and a further reduction of about 6-10 basis points from June-quarter levels. Jefferies expects net interest margins to moderate by 30 basis points in FY27 as new home loans originated at lower rates and competition forces repricing of the existing book. The company is seeking to accelerate growth by raising its share of industry home loan originations to 5% from 2.6% and targeting an increase in non-prime loans to 20% of the home loan book from about 12%. The Sambhav unit, focusing on emerging and affordable borrowers, is expected to scale significantly, with management targeting monthly disbursements of more than ₹600 crore by the end of FY27, compared with ₹450-470 crore in June 2026. The company plans to increase its non-prime loan mix to 20% from 12%, which could support yields.
