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Bajaj Housing Finance Ltd – Long-Term Investor Report

Lesson 107/225 | Study Time: 15 Min

Course: Top Quality Companies

Bajaj Housing Finance Ltd – Long-Term Investor Report

(All figures in ₹ Crores unless mentioned)

1. Company Overview

Bajaj Housing Finance Ltd. (BHFL), a subsidiary of Bajaj Finance Ltd., is a fast-growing housing finance company offering home loans, loans against property, and developer financing. Since inception in FY18, BHFL has delivered strong growth, stable profitability, and one of the best asset quality track records in the HFC industry.

2. Industry & Growth Prospects

Housing Finance Sector

Growth Drivers: Urbanisation, rising disposable incomes, affordable housing push, and Tier-2/3 city penetration.
Sector CAGR: Housing finance in India is expected to grow 12–15% CAGR in AUM over the next decade.
Regulatory Support: Government schemes (PMAY, CLSS) and stable interest rate environment support demand.

BHFL’s Competitive Advantage

Strong parental backing from Bajaj Finance ensures funding access.
Tech-driven underwriting keeps costs low and reduces NPAs.
Pristine Asset Quality: GNPA at 0.28% among the lowest in the industry.

3. Historical Performance

Year	AUM (₹ Cr)	Income	Profit	Margin %
FY2018	3,570	106	10	9.4%
FY2019	17,562	1,526	110	7.2%
FY2020	32,705	2,646	421	15.9%
FY2022	53,320	3,767	710	18.8%
FY2023	69,230	5,665	1,258	22.2%
FY2024	91,370	7,647	1,731	22.6%
FY2025	1,14,719	9,576	2,174	22.7%
Tr. FY2026	1,20,420	9,983	2,279	22.8%

5-Year CAGR (FY18–FY25):

AUM: 29%
Income: 29%
Profit: 39%
Margins: expanded from 9.4% → 22.7%

4. Asset Quality (NPA Trend)

Year	GNPA %
FY2019	0.05%
FY2020	0.08%
FY2021	0.35%
FY2022	0.31%
FY2023	0.22%
FY2024	0.27%
FY2025	0.28%
Tr. FY2026	0.28%

👉 Asset quality has remained excellent, consistently below 0.3% GNPA.

5. Latest Q1 FY26 Highlights

Metric	Q1 FY26	Q1 FY25	Growth
AUM	₹1,20,420 Cr	₹97,071 Cr	+24%
Sales	₹2,616 Cr	₹2,209 Cr	+18%
Profit	₹588 Cr	₹483 Cr	+22%
EPS	0.70	0.62	+13%
Margin	22.5%	21.9%	+0.6%
GNPA	0.28%	0.23%	+0.1%

Major Cost Structure (Q1 FY26)

Finance Cost: 86% of total (₹1,606 Cr, +15%)
Employee Cost: 7% (+20%)
Impairment: 2% (+310%)
Other Exp.: 3% (+45%)
👉 BHFL’s largest expense remains funding cost, but credit cost remains under control.

6. Valuation Analysis

PE Range (limited history): IPO at 55–71x, Tr. FY26 estimated 40–50x.
PBV Range: IPO at 6–8x, currently ~5–6x.
Given limited history, future PE band (30–50x) and PBV band (3–6x) appear sustainable.

7. Forward Estimates

FY2026E:

AUM: ₹1,39,957 Cr
Profit: ₹2,629 Cr
EPS: ₹3.2
BV: ₹27
Blended Fair Value: ~₹107

FY2030E:

AUM: ₹3,41,692 Cr
Profit: ₹5,990 Cr
EPS: ₹7.4
BV: ₹66
Blended Fair Value: ~₹252

FY2035E:

AUM: ₹8,50,240 Cr
Profit: ₹14,904 Cr
EPS: ₹18
BV: ₹165
Blended Fair Value: ~₹627

8. Peer Comparison (FY25)

Company	AUM (₹ Cr)	Profit (₹ Cr)	GNPA %	Margin %
BHFL	1,14,719	2,174	0.28%	22.7%
LIC Housing	2,89,000	~4,700	~1.5%	15%
PNB Housing	74,000	~1,500	~3%	12%

👉 BHFL has superior margins and asset quality compared to peers, though on a smaller AUM base.

9. Portfolio Weightage

Current Price: ₹115 (IPO range proxy)
Strategic Weight: 2.4% in a long-term diversified portfolio
Tactical Weight: ~1.9% based on current valuations

10. Risks & Rewards

Positives:

✅ High growth trajectory in AUM & profits
✅ Superior margins (22%+) and low NPAs
✅ Strong Bajaj parentage ensures funding advantage

Risks:

⚠️ Short operating history vs. mature peers
⚠️ Sensitivity to RBI rate hikes (funding cost)
⚠️ Real estate downturn risk

Conclusion

Bajaj Housing Finance is a fast-growing, high-quality housing finance company with industry-best asset quality and strong profitability. While still at a relatively small scale compared to HDFC or LIC Housing, its growth trajectory and Bajaj group backing make it a long-term compounder in the housing finance sector.

Disclosure: This is an unbiased educational analysis, not a buy/sell recommendation.

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Piyush Patel

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