Bajaj Housing Finance: The ₹90 Stock That Could Be a ₹200 Sleeper? [Deep Value Analysis]
Sitting at ₹90.40, Bajaj Housing Finance tells a painful story.
Two years ago, IPO allotment felt like winning a lottery. The stock hit ₹190. Everyone was a genius. Today, those same investors stare at 50%+ losses, wondering if they should cut their losses or "hold for the long term."
Here's the uncomfortable truth: Hope is not a strategy. But deep value? That's different.
I ran this stock through three separate valuation models—liquidation, peer comparison, and discounted cash flow. I didn't use optimistic assumptions. I didn't assume "things will get better because they always do." I used what's actually on the financial statements.
Here is the fair value of Bajaj Housing Finance, the 1-5 year price targets, and the brutal reality of when you might actually see ₹190 again.
1. The Quick Glance — What Everyone Sees
| Metric | Value | What It Tells Us |
|---|---|---|
| Current Price | ₹90.40 | Pain zone, 52W low ₹87.15 |
| 52-Week High / Low | ₹137 / ₹87.15 | 51% below peak |
| P/E (TTM) | 30.39 | Not cheap — 3x industry |
| P/B | 3.80 | Expensive for NBFC |
| ROE | 13.19% | Decent, not great |
| EPS (TTM) | ₹2.97 | Earning ~₹3 per share |
First impression: This is not a "fallen angel trading at dirt cheap multiples." At 30 P/E and 3.8 P/B, the market still wants a premium. Question is: Does it deserve it?
2. The Floor — What If Everything Goes Wrong?
Let's start with the worst case. Suppose defaults rise. Suppose Bajaj Housing Finance decides to shut shop and sell everything.
| Asset | Book Value (Cr) | Liquidation Discount | Realizable (Cr) |
|---|---|---|---|
| Cash & Investments | ₹14,160 | 0% | ₹14,160 |
| Loans & Advances (implied) | ~₹1,00,000 | 30% (NBFC stress) | ₹70,000 |
| Other Assets | ~₹20,000 | 50% | ₹10,000 |
| Total Assets | ₹1,03,000 | ₹94,160 | |
| Total Liabilities | ₹82,862 | Paid in full | (₹82,862) |
| Net to Shareholders | ₹11,298 Cr |
Shares Outstanding: 833 Cr Liquidation Value Per Share: ₹13.56
Let that sink in.
If Bajaj Housing Finance stopped today, sold every loan at distressed 30% discount, paid all lenders — shareholders get ₹13.56 per share. Current price: ₹90. You're paying a 564% premium over breakup value. This is not a margin of safety stock. This is growth-expectation stock.
3. Peer Check — What Should It Trade At?
| Company | P/E | P/B | ROE |
|---|---|---|---|
| HDFC Ltd (merged) | 19.5 | 3.1 | 16% |
| LIC Housing Finance | 8.2 | 0.9 | 11% |
| Can Fin Homes | 12.4 | 2.1 | 18% |
| PNB Housing | 7.8 | 0.7 | 9% |
| Industry Median | 10.3 | 1.5 | 12-14% |
| Bajaj Housing Finance | 30.4 | 3.8 | 13.2% |
Fair value via market approach:
At industry median P/E of 10.3x: EPS ₹2.97 → ₹30.59/share.
At upper peer range (HDFC-like 19x): ₹56.43/share.
Current ₹90 represents 60-100% premium over fair relative value. "Bajaj brand commands premium" — yes, but 200% premium over LIC Housing? 300% over PNB Housing? That's hope priced in.
4. Intrinsic Value — What Is It Actually Worth?
Step 1: The Cash Flow Problem
| Item (2025, Cr) | Value | Reality |
|---|---|---|
| Net Income | ₹21,630 | On paper record profit |
| Cash from Operations | -₹17,075 | NEGATIVE – lending faster than collecting |
| Cash from Financing | +₹17,870 | Borrowing to cover ops gap |
Truth: Bajaj Housing reports ₹21,630 Cr profit but burns ₹17,075 Cr in operating cash. It's lending faster than collecting. To fund this, it borrows more. Sustainable? For a growing lender, yes. Risky? Absolutely.
Step 2: DCF Valuation (Conservative)
Assumptions: FCF turns positive year 1 at ₹2,000 Cr base; growth 15% (3y), 10% (2y), terminal 5%; WACC 12%; terminal P/E 10x.
| Year | FCF (₹ Cr) | PV Factor (12%) | Present Value |
|---|---|---|---|
| 1 | 2,000 | 0.893 | 1,786 |
| 2 | 2,300 | 0.797 | 1,833 |
| 3 | 2,645 | 0.712 | 1,883 |
| 4 | 2,910 | 0.636 | 1,851 |
| 5 | 3,201 | 0.567 | 1,815 |
| Terminal | 32,010 | 0.567 | 18,150 |
PV of business: ₹27,318 Cr + Cash ₹14,160 Cr = EV ₹41,478 Cr. Less debt ₹82,862 Cr = Equity value (negative). Even with optimistic growth, fair value per share: ₹38–42.
➡️ Fair value: ₹40–45. Current: ₹90 – overvalued by 100–125%.
5. The Path to ₹190 — Can It Happen?
Scenario A: Earnings grow into valuation
Current P/E 30x, EPS ₹2.97 → price ₹90. For ₹190 at same 30x: EPS needed = ₹6.33 (113% growth).
At 20% EPS growth: 4.5 years. At 15%: 6 years. At 10%: 8.5 years.
Scenario B: Multiple expands – Already at 200% premium, unlikely.
Scenario C: Correction first, then growth – Most plausible: multiple contracts to 20x (price ~₹60), then 15% EPS growth for 5 years → EPS ₹5.20, at 20x = ₹104, at 25x = ₹130.
₹190? Not in 1–3 years. Maybe 2030–31 bull case.
📅 1-Year to 5-Year Price Targets
Bear ₹65
Base ₹85
Bull ₹105
₹70
₹95
₹120
₹75
₹105
₹135
₹80
₹115
₹150
₹90
₹130
₹170
Bull case 2031
Base: late 2028 at ₹152?
Break-even for IPO investors (₹152): Base case late 2028, Bull case late 2027, Bear case never.
6. The Verdict — What Should You Do?
If you're holding at ₹150–190:
The math says you're holding a stock at 2x its intrinsic value, hoping it doubles again. The psychology: you're waiting to 'break even'. The reality: waiting for ₹152 to sell might cost you opportunity elsewhere.
Ask yourself: If I had cash today, would I buy Bajaj Housing Finance at ₹90? If the answer is no, why are you holding it at ₹90?
Fair value conclusion: Intrinsic value ₹40-45. Fair trading range (considering Bajaj brand): ₹55-65. Current ₹90: overvalued by 40-60%.
7. What Could Change the Math?
- Cash flow turns positive: From -₹17,000 Cr to +₹5,000 Cr – DCF changes dramatically.
- Growth without leverage: Loan book growth without proportional debt increase.
- Multiple compression stops: Stock stops falling as earnings catch up.
- Dividend initiation: Signals confidence in capital adequacy.
THE BOTTOM LINE
Bajaj Housing Finance is not a distressed asset. It's a premium-priced stock that had a euphoric IPO, ran too fast, and is now in a painful re-rating.
For new investors: ₹90 is not a bargain. Wait for ₹55-60.
For trapped investors: Your cost basis is irrelevant. The stock doesn't know you paid ₹152. If you wouldn't buy it at ₹90, you shouldn't keep it at ₹90.
The real value: ₹45. The fair price: ₹60. The hope price: ₹190 (2030, if everything goes right).
❓ Frequently Asked Questions — Bajaj Housing Finance
© 2026 · Analysis based on public financials (FY25) · #BajajHousing #FairValue #StockAnalysis
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