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livemint.com / 1 month ago
From ‘next HDFC’ to reality check: What’s ailing Bajaj Housing Finance?
₹75 on Friday. It is now just 9% higher than its public issue price of ₹70 in September 2024.
The issue was oversubscribed by about 64x of its offer size driven by huge investor appetite, with chairman Sanjiv Bajaj seeing the company as the contender for becoming the “next HDFC”.The post-listing frenzy pushed it to a peak of ₹188.5 on 18 September 2024. But since then, its fortune has drastically reversed.
Has Bajaj Housing Finance become a case of stock mispricing due to misplaced expectations?Mispricing can be understood through two valuation comparisons: with HDFC and with its listed peers.HDFC, before its merger with HDFC Bank, traded at ₹2,724 apiece on its last trading day on 12 July 2023. If the market value per share of HDFC’s investments in various group companies was deducted from its market price, then HDFC was valued at ₹1,200 with standalone earnings per share (EPS) of ₹89 for FY23—translating into a price-to-earnings (P/E) multiple of nearly 14x.Despite the steep correction, Bajaj Housing Finance is trading at FY26 P/E of 25x, showed Bloomberg data.
PNB Housing Finance and LIC Housing Finance are trading at FY26 P/E of 9x and 5x, respectively.The valuation gap between Bajaj and its peers appears wide, though part of it may be justified by stronger loan book growth.Bajaj’s assets under management (AUM) grew 23% in 9MFY26. PNB Housing Finance and LIC Housing Finance reported relatively modest AUM growth of 12% and 5%, respectively.
Bajaj remains on course to achieve its FY26 AUM growth guidance of 21–23%.The current AUM growth rate is being affected as there are many requests from borrowers of Bajaj to transfer their outstanding loans to other lenders that are offering lower rates, the management said. This
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21.05 / 10:17
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21.05 / 10:17
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21.05 / 10:17
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21.05 / 09:47
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Subscribe to enjoy similar stories.Forensic audits have gained significance in today’s world of business as they serve as a useful tool for commercial lenders to investigate fraud by borrowers and/or identify other deep-seated financial irregularities. Forensic auditors are also employed by resolution professionals to report on preferential, undervalued, fraudulent and extortionate (‘PUFE’) transactions for adjudication under India’s Insolvency and Bankruptcy Code (IBC). While there is no single universal definition, several globally recognized organizations have provided widely accepted definitions (and norms) of forensic auditing.
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