Bajaj Housing Finance shares have three key risks after Q2 results, Motilal Oswal highlights

Shares of Bajaj Housing Finance will be in focus on Friday, November 7, after the company reported its September quarter results post-market hours on Thursday. Net profit rose 18% year-on-year to ₹643 crore, while revenue grew 17% to ₹2,614 crore.

Asset quality remained stable during the quarter. Gross non-performing assets (NPA) stood at 0.26%, compared with 0.29% in the June quarter, while net NPA was unchanged at 0.12%.

Brokerage firm Motilal Oswal maintained a 'Neutral' rating on the stock, with a target price of ₹120, implying a potential upside of 10% from current levels.

Motilal said Bajaj Housing delivered a strong performance in Q2, with robust assets under management (AUM) and disbursement growth across products, despite heightened competition.

The company maintained its margins in a declining interest rate environment while preserving strong asset quality.

The brokerage said that Bajaj Housing Finance remains a strong franchise, well-positioned to navigate rising competition and a softer rate cycle while sustaining healthy growth and profitability.

However, it highlighted key risks such as a potential slowdown in overall growth and demand, limited ability to expand net interest margins (NIM) amid competitive pricing, and possible asset-quality pressure if the company scales up its non-prime segments.

Motilal expects the company's loans and profit to grow at a compound annual growth rate (CAGR) of 22% over FY25-28, with return on assets (RoA) and return on equity (RoE) estimated to reach 2.3% and 14.2%, respectively, by FY28.

Bajaj Housing Finance was among the most successful listings of last year, debuting at a premium of more than 100% to its IPO price of ₹70.

However, after hitting a post-listing high of over ₹180, the stock has since corrected nearly 40% and is now trading close to the ₹100 mark.

On Thursday, shares ended 0.3% lower at ₹109.25 ahead of the results announcement. The stock is down 15% so far this year.