Bajaj Housing Finance: Broker targets Rs 100-125 after Q4

Stock moves: drop after a strong 30-day run

Shares of Bajaj Housing Finance Ltd (BHFL), promoted by Bajaj Finance Ltd, fell 2% on Tuesday. The decline came after a sharp run-up, with the stock up 23% over the past 30 days, raising questions on whether recent gains can hold. The stock has also declined three times in the last four sessions, highlighting near-term volatility. In a separate trading session referenced in brokerage commentary, the stock rose as much as 5.76% to Rs 94.80 on the BSE by 1.13 pm.

What stood out in the latest results

Brokerage notes said BHFL’s Q4 performance was largely in line, with robust asset quality. The key concern was a sharper-than-expected contraction in net interest margin (NIM). Analysts also flagged that competitive intensity remained elevated, especially in prime housing loans. Management commentary pointed to persistent pricing pressure across segments, driven by the strong presence of PSU banks and large private lenders.

Competitive pressures and the role of banks in pricing

BHFL’s management said the operating environment continues to be highly competitive. Banks were described as the “pricing setter” in mortgages, creating pressure on lending yields for housing finance companies. The company also flagged that BT-Outs remained structurally high at 10%, even in a stable policy rate environment. Brokerages linked these factors to continued pressure on spreads and near-term profitability metrics.

MOFSL view: growth intact, but NIM risks remain

Motilal Oswal Financial Services (MOFSL) maintained a ‘Neutral’ rating and suggested a target price of Rs 100. MOFSL said it continues to believe in management’s ability to improve profitability, supported by healthy AUM growth expectations, including a 22% AUM CAGR over FY26-28E. It broadly expects steady NIM and benign credit costs, but warned that competition from PSU banks and higher BT-Outs may push BHFL to cut lending rates. MOFSL said this could pressure net total income (NTI), and also flagged valuation concerns, noting that a 2.9x FY27E valuation already reflects medium-term growth and profitability.

ICICI Securities: Buy maintained, focus on efficiency and returns

ICICI Securities reiterated a ‘Buy’ rating with a target price of Rs 125, and in one note indicated an upside close to 40%. It said Q4 performance was steady, with return on assets (RoA) at 2.2% and return on equity (RoE) at 12%, aligning with management guidance and the eight-quarter average. ICICI Securities noted that intensified competition in prime housing continued to pressure NIM and led to a flat sequential profit after tax (PAT). Even so, the brokerage said management remains optimistic about maintaining a 2.0%-2.2% RoA for FY27, with improved efficiencies and moderated credit costs expected to offset near-term spread compression.

Growth strategy: market share ambition and cost ratios

ICICI Securities said BHFL is targeting a 5% share of home loan originations, up from the current 2.5%-2.7%. It also highlighted management’s expectation that operating expenses (opex) to net total income (NTI) could moderate to 14%-15% over the medium term from the current 20%. Separately, ICICI Securities referenced an industry growth outlook of 14%-16% CAGR till FY28, while saying BHFL aims to outpace that through operating efficiency and credit quality.

Key financial datapoints mentioned by brokerages

BHFL reported a 21% rise in Q3 net profit to Rs 664 crore, compared with Rs 548.02 crore in the year-ago quarter. Net interest income (NII) rose 19% to Rs 963 crore in Q3 from Rs 806 crore in Q3FY25. Assets under management (AUM) were reported at Rs 133,412 crore as of December 31, 2025, up 23% from Rs 108,314 crore as of December 31, 2024. Another quarterly result reference in the text cited profit rising 14% to Rs 669 crore and NII up 15%.

Table: Price action, targets, and operating metrics

Market impact: what investors are watching

The key market debate is whether BHFL can sustain growth while defending margins as banks remain aggressive on mortgage pricing. Brokerages that are neutral-to-positive point to strong asset quality and AUM momentum, but link earnings sensitivity to NIM moves and pricing competition. Risk factors explicitly noted include a slowdown in the growth and demand environment, inability to drive NIM expansion amid competitive pricing, and any deterioration in asset quality while scaling up non-prime segments.

Company profile and regulatory positioning

BHFL is a non-deposit-taking housing finance company registered with the National Housing Bank. Brokerage commentary also describes BHFL as a fast-growing franchise with a diversified product mix that includes home loans, lease rental discounting, developer finance, and loan-against-property.

Conclusion

BHFL’s recent stock volatility reflects a push-pull between strong growth and asset quality on one side, and NIM pressure from intense competition on the other. Broker targets currently range from Rs 100 to Rs 125, with near-term focus on pricing discipline, BT-Out trends, and management’s progress on lowering opex-to-NTI.