SELL Bajaj Housing Finance
SELL Bajaj Housing Finance – Kotak Institutional Equities, a reputable brokerage firm, has recently started covering the newly listed Bajaj Housing Finance Ltd. and has recommended selling the stock.
On Friday, the share is trading at Rs. 126.41, 0.02% higher than previous close.
Kotak Institutional Equities has set a price target of ₹100 for the stock, indicating a potential downside of 20% from the closing levels on Thursday. The brokerage firm’s main reason for this recommendation is the high valuation of the stock.
Despite the expensive valuation, Kotak acknowledges the positive aspects of Bajaj Housing Finance, such as its strong growth trajectory with Assets Under Management (AUM) growing at a Compounded Annual Growth Rate (CAGR) of 24% between the financial years 2024-2027. Additionally, the company’s higher pedigree and clean asset quality over the years are seen as strengths.
However, challenges like intense competition and low spreads in the prime housing sector have limited the company’s Return on Equity (RoE) to mid-teen levels.
Kotak Institutional Equities has highlighted potential risks for Bajaj Housing Finance, including the need for effective execution of business strategies to maintain high growth, risks to Net Interest Margin (NIM) from changes in lending rates, and intense competition in the prime segment.
Out of the seven analysts covering Bajaj Housing Finance, four have a sell rating on the stock, while the remaining three have a buy rating.
Bajaj Housing Finance had a successful listing in 2024, with its stock trading at a premium of over 100% compared to its IPO price of ₹70. The stock saw significant gains on its trading debut, reaching a high of ₹188.5 before correcting by 33%.
On Thursday, shares of Bajaj Housing Finance closed 0.5% lower at ₹126.5, while its parent company Bajaj Finance ended the day with gains of over 6%.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.