Shocking Plunge: Bajaj Housing Finance Nosedives 10% to Record Low – Discover the Dramatic Reasons Behind the Drop!
Shares of Bajaj Housing Finance plunged 10% to Rs 135.65 during Monday’s intra-day trading on the BSE, marking their lowest point since the company’s market debut on September 16, 2024. The stock has now declined 28% from its 52-week high of Rs 188.45, reached just two days after listing. Nonetheless, it remains 94% above its issue price of Rs 70 per share. By 03:09 PM, Bajaj Housing Finance’s shares had dipped 9.6% to Rs 136.20, while the BSE Sensex fell by 0.77%. Trading volumes were significant, with 64.87 million shares traded across the NSE and BSE.
Bajaj Housing Finance stands as the second-largest and fastest-growing housing finance company in India. Recently, HSBC Global Research initiated coverage on the company with a ‘Reduce’ rating, setting a target price of Rs 110 per share. Their analysis points to a 2.4% return on assets for FY24, driven by an optimized asset mix, operating leverage, and low credit costs. However, HSBC predicts future margin compression, normalization of credit costs, and a decline in RoA, expecting core return on equity to range between 11-14% depending on business diversification.
The brokerage firm foresees a slowdown in earnings growth, estimating a 17% EPS increase over FY24-27 compared to 41% in FY21-24. Beyond earnings, HSBC identifies two additional risks to the company’s valuation: a discrepancy between projected and actual ROE, as well as more attractive valuations of large NBFC peers with higher ROEs and stable growth. Mitigating factors include low credit costs, robust year-on-year AUM growth of 30%, and competitive restraint from banks.
HSBC utilizes a Gordon growth model for valuation and notes potential upside risks, such as minimal net interest margin compression if funding costs decrease swiftly.
Original Story https://www.business-standard.com/markets/news/bajaj-housing-finance-slips-10-hits-lowest-level-since-listing-124100700598_1.html
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