On the day Bajaj Housing Finance listed in September 2024, it opened at Rs 150 — 114 per cent above its IPO price of Rs 70. By the third day of trading, the stock had touched Rs 188.45. That price has never been seen again. The current price is Rs 84.75. From that third-day high, the stock has fallen 55 per cent.
The one-year return is negative 24.67 per cent. Year-to-date the return is negative 11.83 per cent. The 52-week high of Rs 117.95 was hit on August 18, 2025. The 52-week low of Rs 72.60 was touched on March 30, 2026. The stock currently sits 28.2 per cent below its 52-week high.
Now read the business alongside that price history. Revenue in Q1 FY27 was Rs 3,063 crore — the highest in company history. PAT in Q1 FY27 was Rs 715 crore — the highest in company history. Gross NPA is 0.29 per cent. Net NPA is 0.12 per cent. Every single quarter since listing has shown higher revenue and higher profit than the one before it.
The business has not declined. The stock has. Those are different things — and the gap between them is the question this article addresses.
What Actually Happened at Listing
The IPO price was Rs 70. The listing price was Rs 150. The third-day high was Rs 188.45. At Rs 188, the market was assigning Bajaj Housing Finance a valuation that priced in several years of future earnings delivery at a premium multiple. Investors who bought at listing were not buying a Rs 70 business — they were buying at 2.7 times the IPO price on the first day.
The subsequent decline from Rs 188 to Rs 84 is therefore only partially a story about Bajaj Housing Finance. It is also a story about what happens when listing euphoria prices a business at levels that even strong execution struggles to justify in the near term. The business has been executing. The multiple compression is what drove the price down — not deteriorating fundamentals.
The Business That the Stock Price is Obscuring:
Revenue has grown at 25.3 per cent compounded over three years, while profit has grown at 26.9 per cent. Three-year EPS growth stands at 18.1 per cent. Financing margin has remained broadly stable at around 29–31 per cent in recent years, indicating resilience in the underlying financing business. However, reported NIM has started to moderate, making margin progression an important factor to monitor going forward.
The quarterly progression since listing confirms no deterioration.
Revenue has increased sequentially in every quarter, while profit has maintained a strong upward trajectory apart from a small dip in Q1 FY26. The asset-quality numbers remain a key strength. Gross NPA peaked at 0.30 per cent in Q1 FY26 before improving to 0.26–0.27 per cent in subsequent quarters, although it edged up to 0.29 per cent in Q1 FY27. Net NPA stood at 0.12 per cent in Q1 FY27. Despite the modest sequential movement, asset quality remains exceptionally strong.
Why the Stock Has Fallen Despite the Business Growing
Three factors help explain the gap between the company’s operating performance and its stock price.
The first is the correction from listing euphoria. A stock that listed at Rs 150 against an IPO price of Rs 70 and subsequently touched Rs 188.45 had embedded very high expectations into its valuation. Even strong earnings growth can struggle to justify such a starting multiple in the near term. The subsequent correction therefore reflects not only business performance but also a significant normalisation of the valuation investors were willing to pay.
The second is the changing economics of mortgage growth. Management expects NIM to moderate by 20–25 basis points during FY27. The reason is important: in a stable interest-rate environment, higher-yielding legacy loans are being replaced by newer loans originated at lower yields, while competitive intensity limits the company’s ability to increase pricing.
The third is the level of returns relative to the valuation. BHFL is growing rapidly, but FY27 ROE is currently expected at only 12–13 per cent. For a company trading at more than 3x book value, the market needs evidence that incremental capital can generate higher returns over time. The key question is therefore not whether BHFL can grow, but whether it can grow while improving returns on equity.
The operating momentum, however, remains strong. AUM reached Rs 1.50 lakh crore in Q1 FY27, up 24 per cent year-on-year, while quarterly disbursements rose 33 per cent to Rs 19,509 crore. Management described the quarter as having the highest-ever quarterly AUM addition and disbursement. This shows that the core growth engine remains intact even as the profitability profile faces some pressure.
Where the Stock Currently Stands
At Rs 84.75, the stock trades at a P/E of 26.1x against an industry P/E of 13.5x. Price to book stands at 3.14x against an industry PBV of 1.82x. This means the stock remains expensive relative to the broader housing-finance sector, despite having corrected sharply from its peak. The valuation therefore cannot be justified merely by the fall in the share price; it needs to be supported by superior growth, asset quality and improving returns on equity.
This is the central tension in the current price. On one hand, the stock is still at nearly double the industry P/E multiple — Bajaj Housing Finance is not cheap by sector standards regardless of how much it has fallen. On the other hand, a business with 30 per cent financing margins, 0.29 per cent gross NPA, consistent quarterly profit growth and the backing of the Bajaj brand arguably deserves a premium to sector peers whose NPA ratios and growth trajectories are less impressive.
ROE of 12.1 per cent and a three-year average of 13.3 per cent are respectable but not yet high enough to make a 3x-plus price-to-book valuation self-evident. The key valuation trigger will therefore be an improvement in return on equity without compromising asset quality or growth. Management currently expects FY27 ROE in the 12–13 per cent range.
The Honest Risks
The biggest risk is margin compression rather than asset quality. Management expects NIM to moderate by 20–25 basis points in FY27 as competitive intensity remains high and higher-yielding legacy loans are replaced by lower-yielding new loans.
The second risk is that strong balance-sheet growth may not immediately translate into proportionately higher returns. Management expects ROE at 12–13 per cent for FY27, meaning the company still has to demonstrate that scale and operating efficiencies can eventually push returns higher.
Negative free cash flow of Rs 19,938 crore should not be interpreted in the same way as it would for a manufacturing company. Lending businesses naturally consume cash as their loan books expand. The more relevant factors are access to funding, liquidity and balance-sheet strength. BHFL had a liquidity buffer of Rs 2,516 crore and an LCR of 158 per cent at June 2026, well above the 100 per cent regulatory requirement.
Promoter ownership remains high at 86.7 per cent, with no pledged shares. However, the high promoter holding also means that compliance with minimum public-shareholding requirements can result in periodic stake sales and temporary supply pressure on the stock.
The Question the Current Price Forces
From the Rs 70 IPO price, the stock at Rs 84.75 still represents a gain for IPO investors. From the Rs 150 listing price, however, it represents a substantial loss, while the fall from the Rs 188.45 all-time high is even sharper. The relevant reference point for a new investor is neither the IPO price nor the peak — it is the earnings power and valuation the business can support today.
And that is where the investment debate becomes interesting. BHFL is not showing signs of a deteriorating franchise. AUM grew 24 per cent year-on-year in Q1 FY27, disbursements grew 33 per cent, PAT grew 23 per cent, and asset quality remained exceptionally strong with GNPA at 0.29 per cent and NNPA at 0.12 per cent.
At the same time, the stock is not obviously cheap. At around 3.1x book value and 26x earnings, investors are still paying a significant premium to the sector. Management expects NIM to moderate by 20–25 basis points and ROE to remain at 12–13 per cent during FY27.
Therefore, the investment case is no longer simply about whether Bajaj Housing Finance can grow. It is about whether the company can sustain 20 per cent+ AUM growth, preserve its exceptional asset quality and gradually improve ROE while navigating margin pressure. If returns on equity improve meaningfully as the loan book scales, the current valuation could become easier to justify. If ROE remains around 12–13 per cent while NIM continues to compress, the premium valuation could remain a ceiling on the stock despite continued earnings growth.
That is ultimately the gap between the business and the stock price and the next few quarters will determine which side of that equation proves correct.
Written by Dalal Street Investment Journal
Source: Financial Express
Disclaimer: This article is for informational purposes only and not investment advice.
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