2 weeks ago
Why Bajaj Housing Finance stock fell 55% despite record business
When a new company sells its shares to people for the first time, everyone can get very excited.
That happened with Bajaj Housing Finance in September 2024, when its shares jumped from Rs 70 to Rs 150 on the very first day.
Soon after, the share price reached Rs 188, but then it started going down.
Today the shares cost about Rs 85, which is much less than the excited price.
Even though the share price fell, the company itself kept doing really well.
It keeps making more money and more profit than ever before, in every single three-month period.
The company is also very safe with its money, with very few loans that are not being paid back.
The price went down mostly because the first-day excitement was too high, not because the company became bad.
Now the company has to prove that it can keep growing while making better returns on the money it uses.
That is why the share price is waiting to catch up with how well the company is doing.
Bajaj Housing Finance stock has fallen 55% from its third-day high of Rs 188.45 after listing in September 2024, now trading at Rs 84.75.
The stock listed at Rs 150, 114% above its IPO price of Rs 70, and the subsequent decline is attributed largely to valuation normalisation of listing euphoria.
Revenue in Q1 FY27 hit a record Rs 3,063 crore and PAT hit a record Rs 715 crore, with revenue up sequentially every quarter since listing.
Asset quality remains strong with gross NPA of 0.29% and net NPA of 0.12%, while AUM reached Rs 1.50 lakh crore, up 24% year-on-year.
Despite the fall, the stock still trades at a premium, with a P/E of 26.1x versus an industry P/E of 13.5x and price-to-book of 3.14x versus 1.82x for the sector.
Management expects NIM to moderate by 20-25 basis points in FY27 as higher-yielding legacy loans are replaced by lower-yielding new loans, with FY27 ROE projected at 12-13%.
- Who
- Bajaj Housing Finance and its investors on the Indian stock market
- What
- The stock fell 55% from its peak even as the company posted record revenue and profit
- Where
- The Indian stock market, with the stock listed on the National Stock Exchange
- When
- From its September 2024 listing through the first quarter of FY27 (April-June 2026)
- Why
- A correction from listing euphoria and valuation compression, as management expects margins to moderate while returns on equity remain modest
Business strength justifies a premium
Valuation remains too expensive
Is the current valuation justified?
Business strength justifies a premium
Strong growth, exceptional asset quality, stable financing margins of around 30%, and the backing of the Bajaj brand arguably deserve a premium to sector peers with weaker NPA ratios and growth.
Valuation remains too expensive
At 26x earnings and about 3.1x book value versus sector multiples of 13.5x and 1.82x, the stock remains expensive and the premium valuation could keep capping the share price.
Will returns on equity improve?
Business strength justifies a premium
As the loan book scales, operating efficiencies and continued 20%+ AUM growth can gradually push returns higher and make the current valuation easier to justify.
Valuation remains too expensive
With FY27 ROE expected at only 12-13% and NIM set to moderate by 20-25 basis points, the market needs proof that incremental capital can generate higher returns.
Key facts
- Current stock price
- Rs 84.75
- IPO price
- Rs 70 (listed at Rs 150, up 114%)
- Peak price (third day of trading)
- Rs 188.45
- Fall from peak
- 55%
- 52-week high / low
- Rs 117.95 (Aug 18, 2025) / Rs 72.60 (Mar 30, 2026)
- Q1 FY27 revenue / PAT
- Rs 3,063 crore / Rs 715 crore (both record highs)
- Gross NPA / Net NPA
- 0.29% / 0.12%
- AUM growth (Q1 FY27)
- Rs 1.50 lakh crore, up 24% year-on-year
Sources
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