Subscribe for Bajaj Housing Finance Ltd; LKP Research

LKP Research, has come out with its report on Bajaj Housing Finance Ltd. The research firm has recommended to “ Subscribe” the ipo in its research report as on September 04 2024.

Broker Research

September 05, 2024 / 10:34 IST

IPO

LKP Research, IPO report on Bajaj Housing Finance Ltd

Bajaj Housing Finance Limited (“BHFL”) is a non-deposit taking Housing Finance Company (“HFC”), registered with the National Housing Bank (“NHB”) since September 24, 2015, and engaged in mortgage lending since Fiscal 2018. BHFL offers financial solutions tailored to individuals and corporate entities for the purchase and renovation of homes and commercial spaces. Their mortgage product suite is comprehensive and comprises (i) home loans; (ii) loans against property (“LAP”); (iii) lease rental discounting; and (iv) developer financing. Furthermore, their primary emphasis is on individual retail housing loans, complemented by a diversified collection of lease rental discounting and developer loans. Consequently, their financial products cater to every customer segment, from individual homebuyers to large-scale developers. As of March 31, 2024, company’s assets under management (“AUM”) were ₹91,370.40 crore, reflecting a CAGR of 30.9% between Fiscals 2022 to 2024. Further, their AUM was ₹97,071.33 as at June 30, 2024, crore making it the s the 2nd largest HFC in terms of AUM. The company has a network of 215 branches as at June 30, 2024, spread across 174 locations in 20 states and 3 union territories, which are overseen by 6 centralized hubs for retail underwriting and 7 centralized processing hubs for loan processing with key presence in Maharashtra, Karnataka, Telangana, Gujarat and the union territory of New Delhi as at June 30, 2024. Company’s strategic focus is on low risk and fast-growing home loan customers and as at March 31, 2024, home loans contributed 57.8% of their AUM, of which 87.5% pertained to salaried customers, 4.3% selfemployed professional customers and 8.2% self-employed non-professional customers. Even amidst the current economic climate marked by inflationary pressures and rising interest rates over the last 2 years, the Gross Non-Performing Assets (“GNPA”) ratio and Net Non-Performing Assets (“NNPA”) ratio had been at 0.28% and 0.11%, respectively, as at June 30, 2024.

Valuation and Outlook

At higher price band (Rs70), the stock valued at 3.72(x) 1QFY25 P/BVPS. Factoring the superlative return ratios, i.e. ROA/ROE of 2.3%/14.3% 1QFY25, we believe that Bajaj Housing Finance Limited is worth subscribing. Thus we recommend SUBSCRIBE.

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