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Kotak Institutional Equities has a price target of ₹100 on the stock, which implies a potential downside of 20% from Thursday’s closing levels.
The brokerage has cited expensive valuations of the stock as the key rationale behind its stance.
Kotak said that a strong growth trajectory, where Assets Under Management (AUM) has grown at a Compounded Annual Growth Rate (CAGR) of 24% between financial year 2024-2027, higher pedigree and clean asset quality over the years are some of the key positives for Bajaj Housing Finance.
However, intense competition and low spreads in the prime housing space, keep a lid on the company’s Return on Equity (RoE) to mid-teen levels.
Effective execution of its business strategies to sustain high growth, risks to its Net Interest Margin (NIM) from migration to the External Benchmark Lending Rate (EBLR) or a sharp movement in rates and intense competition in the prime segment are some of the key risks for Bajaj Housing Finance, Kotak Institutional Equities highlighted in its note.
Out of the seven analysts that now have coverage on Bajaj Housing Finance, four of them have a “sell” rating on the stock, while the other three have a “buy” rating.
Bajaj Housing Finance became one of the most successful listings of 2024 as it listed at a premium of over 100% compared to its IPO price of ₹70. The stock had ended its trading debut with gains of 135% from the issue price and went on to make a post-listing high of ₹188.5.
The stock though, has corrected by 33% from those post-listing high levels.
Shares of Bajaj Housing Finance ended 0.5% lower on Thursday at ₹126.5, a day when its parent company Bajaj Finance ended with gains of over 6%.
