1. 🧠 At a Glance
Bajaj Housing Finance Ltd (BHFL) isn’t your average NBFC. It’s Bajaj Finserv’s pure-play housing finance arm that took just 7 years to become India’s #2 HFC by profitability. But here’s the kicker — the stock trades at 5x book and a spicy 46x PE. Investors are treating it like HDFC Lite… but is it really a safe bet or just a ₹1 lakh crore illusion baked in low NPAs and high growth?
2. 🎬 Introduction with Hook
If Bajaj Housing was a movie, it would be Dhoom 3 — high-speed, loaded with hype, and backed by a famous parent.
The company IPO’d via direct listing and instantly zoomed past ₹1 lakh crore in market cap. But while investors are busy comparing it to HDFC and LIC Housing, we’re here asking the real question:
“Is this valuation even remotely justifiable?”
Let’s unbox this mortgage rocket.
3. 🏭 Business Model (WTF Do They Even Do?)
- Registered as an HFC under NHB, but technically a non-deposit-taking NBFC
- Part of Bajaj Finserv group, alongside Bajaj Finance and Bajaj Allianz
- Core products:
- Home loans
- Loan against property (LAP)
- Developer financing
- Lease rental discounting
- Retail-heavy book: ~90% retail, 10% wholesale (and even that’s selectively underwritten)
- Present in over 300 locations with one of the highest AUM/branch productivity in the sector
4. 📈 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY20 | FY25 | CAGR (5Y) |
|---|---|---|---|
| Revenue (₹ Cr) | 2,646 | 9,576 | 29% |
| Net Profit (₹ Cr) | 421 | 2,163 | 39% |
| ROE (%) | 8% | 13% | Meh |
| Gross NPA (%) | ~0.23% | ~0.29% | Clean |
| Net NPA (%) | ~0.08% | ~0.11% | Still Clean |
| Operating Margin (%) | 22% | 29% | Impressive |
Despite low NPAs, the ROE has plateaued at 13%, mostly due to conservative gearing and expanding capital base.
5. 📉 Valuation – Is It Cheap, Meh, or Crack?
Let’s do the math.
- Current Price: ₹121
- Market Cap: ₹1,00,663 Cr
- Book Value: ₹24
- PE (TTM): 46.5x
- Price/Book: 5.04x
🧮 EduInvesting Fair Value Range:
| Metric | Estimate |
|---|---|
| Sustainable ROE | 13–14% |
| Justified P/BV (ROE/COE) | 2.8–3.2x |
| Fair Price Range (FY25 BV ₹24) | ₹67 – ₹77 |
🤯 The stock trades at 60%+ premium to optimistic fair value. Unless ROE hits 18% or disbursements explode, the current valuation feels… euphoric.
6. 🍿 What’s Cooking – News, Triggers, Drama
- 🏗️ ₹14,640 Cr disbursed in Q1 FY26 — that’s 24% YoY growth in AUM
- 🧾 Raised ₹1,001 Cr via NCDs at 7.08%, sign of investor confidence in credit profile
- 🔊 Concall on 23 July — likely to give FY26 growth guidance
- 💸 Zero dividend payout — full reinvestment mode
What’s not cooking: no whispers of a Finserv-BHFL merger, no major fintech disruption (yet), and no public listing of a competitor looming.
7. 💸 Balance Sheet – How Much Debt, How Many Dreams?
| Year | Borrowings (₹ Cr) | AUM Proxy |
|---|---|---|
| FY20 | 25,600 | Low base |
| FY25 | 82,072 | 3.2x jump |
- Total assets have grown 3.3x in 5 years
- Capital adequacy remains solid — no signs of leverage bloat
- Networth has grown from ₹1,604 Cr (FY20) to ₹19,947 Cr (FY25)
The growth looks real. The discipline is visible. The question is valuation.
8. 💵 Cash Flow – Sab Number Game Hai
| Year | Cash from Ops (₹ Cr) | Cash from Financing (₹ Cr) |
|---|---|---|
| FY23 | -14,332 | +14,630 |
| FY25 | -17,075 | +17,870 |
Housing finance is a cash-hungry game — almost all cash from ops is negative due to loan disbursements. But they’re managing it through NCDs, bonds, and low-cost borrowings.
📌 No signs of stress — just a capital-intensive business doing what it does.
9. 📐 Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 13% |
| ROA | 2.35% |
| Net NPA | 0.11% |
| Interest Coverage | Low |
| Dividend Yield | 0% |
| Price/BV | 5.04x |
✅ Clean book
✅ Solid disbursements
❌ Expensive price
❌ No yield kicker
❌ ROE not keeping up with valuation
10. 📊 P&L Breakdown – Show Me the Money
| Year | Revenue (₹ Cr) | Financing Profit (₹ Cr) | Net Profit (₹ Cr) |
|---|---|---|---|
| FY20 | 2,646 | 591 | 421 |
| FY25 | 9,576 | 2,814 | 2,163 |
- Financing margin has improved from 22% to 29%
- Profitability is scaling well, but marginal compression is visible post FY24
No funny accounting, no sudden spikes — just steady Bajaj-style growth.
11. 🆚 Peer Comparison – Who Else in the Game?
| Company | P/E | P/B | ROE | GNPA | AUM (₹ Cr) |
|---|---|---|---|---|---|
| Bajaj Housing | 46.5x | 5.04x | 13% | 0.29% | 1,05,940 |
| LIC Housing | 6.1x | 0.91x | 16% | 1.8% | 2,81,100 |
| PNB Housing | 14.3x | 1.66x | 12% | 3.7% | 76,327 |
| Home First | 37.4x | 4.95x | 16% | 1.3% | 15,391 |
| Aptus Value | 23.2x | 4.03x | 18.6% | 1.4% | 17,504 |
✅ Lowest NPA
✅ Strong AUM per branch
❌ Highest valuation
❌ ROE not matching Aptus or LIC HFL
12. 📦 Miscellaneous – Shareholding, Promoters
- Promoters (Bajaj Finserv): 88.75%
- Public: 9.4%
- FIIs + DIIs: Less than 2% combined
- Retail shareholders: 26 lakh+ already, despite no IPO!
No pledges. No dilution. No suspicious names. Clean cap table.
13. ⚖️ EduInvesting Verdict™
Bajaj Housing Finance is like that well-behaved kid in class who’s getting Ivy League attention just for being neat and clean.
- Financials? 👌
- NPA book? 💯
- Promoter group? Best in class
- But valuation? Bro… it’s 5x book and 46x PE for a 13% ROE company.
If it grows AUM at 25% CAGR for the next 5 years and scales ROE to 16–17%, maybe it justifies a ₹1 lakh crore tag. But until then, it’s priced like a Ferrari in a Maruti parking lot.
📉 Fair Value Range: ₹67–₹77
📈 Current Price: ₹121
👀 Verdict: Beautiful balance sheet, but valuation is doing Zumba.
✍️ Written by Prashant | 📅 July 12, 2025
Tags: Bajaj Housing Finance, BHFL, Bajaj Finserv, HFC Stocks, Housing Finance Valuation, NBFC Stocks, EduInvesting, Q1FY26, Bajaj Group Stocks, Overvalued Stocks
