Bajaj Housing Finance: Key Risks and Opportunities After Q2 Results

Shares of Bajaj Housing Finance will be in focus on Friday, November 7, following the company's Q2 results, which were announced post-market hours on Thursday. The company reported a net profit of ₹643 crore, marking an 18% year-on-year increase, while revenue grew by 17% to ₹2,614 crore.

Asset quality remained stable during the quarter, with gross non-performing assets (NPA) at 0.26%, down from 0.29% in the June quarter. The net NPA remained unchanged at 0.12%.

Brokerage firm Motilal Oswal maintained a 'Neutral' rating on Bajaj Housing Finance, setting a target price of ₹120, which implies a potential upside of 10% from current levels. The firm noted that Bajaj Housing delivered a strong performance in Q2, with robust assets under management (AUM) and disbursement growth across products, despite heightened competition.

The company managed to maintain its margins in a declining interest rate environment while preserving strong asset quality. According to Motilal Oswal, Bajaj Housing Finance remains a strong franchise, well-positioned to navigate rising competition and a softer rate cycle while sustaining healthy growth and profitability.

However, Motilal Oswal also highlighted key risks that investors should be aware of. These include a potential slowdown in overall growth and demand, limited ability to expand net interest margins (NIM) due to competitive pricing, and possible asset-quality pressure if the company scales up its non-prime segments.

Motilal Oswal expects Bajaj Housing Finance's loans and profit to grow at a compound annual growth rate (CAGR) of 22% over FY25-28, with return on assets (RoA) and return on equity (RoE) estimated to reach 2.3% and 14.2%, respectively, by FY28.

Bajaj Housing Finance was one of the most successful listings of last year, debuting at a premium of more than 100% to its IPO price of ₹70. However, after hitting a post-listing high of over ₹180, the stock has since corrected nearly 40% and is now trading close to the ₹100 mark.

On Thursday, shares ended 0.3% lower at ₹109.25 ahead of the results announcement. The stock has declined by 15% so far this year.