Bajaj Housing Finance Share Price Target at Rs 107: Deven Choksey Research

Keshav Seth 3 August 2026

Deven Choksey Research has maintained a Buy rating on Bajaj Housing Finance, setting a target price of Rs 107, implying 23% upside from the current market price of Rs 87. The brokerage's July 31 first-quarter update shows the housing lender's profit grew 22.8% year-on-year to Rs 715 crore, beating the brokerage's own estimate of Rs 635 crore, aided by stronger margins and an unusually low, one-off credit cost. Assets under management expanded 24.2% to Rs 1,49,624 crore, while disbursements jumped 33.1% to Rs 19,500 crore. The brokerage values the stock at 3.5 times estimated adjusted book value per share for fiscal 2027.

Deven Choksey Research | Result Update — Q1FY27

Bajaj Housing Finance Beats Profit Estimates as Cheaper Funding Offsets Rate Pressure, Deven Choksey Keeps Buy at Rs 107

CMP Rs 87 | Target Rs 107 | Upside ~23% | Rating: BUY (Maintained) | Valuation: 3.5x FY27E Adjusted BVPS

Bajaj Housing Finance Ltd. delivered a first quarter where the headline beat was less about loan growth than about how cheaply the company funded it. In a July 31 result update, Deven Choksey Research analyst Neel Mehta maintained a Buy rating on the housing lender and kept the target price at Rs 107 a share. Against a current market price of Rs 87, that target implies roughly 23% upside. The company's market capitalization stands at approximately Rs 72,158 crore, according to the report.

Estimate vs. Actual: Where the Beat Came From

Metric	Brokerage Estimate	Actual (Q1FY27)	YoY Growth
Net Interest Income	Rs 906 cr	Rs 968 cr	+9.2%
Profit After Tax	Rs 635 cr	Rs 715 cr	+22.8%
Pre-Provision Operating Profit	—	Rs 945 cr	+18.4%

The brokerage attributed the outperformance to stronger-than-expected margin performance and an unusually low, one-off credit cost rather than to any surprise in loan growth, which came in broadly as the market anticipated.

The Real Story: Funding Costs Fell When They Were Supposed to Rise

Deven Choksey Research had modeled a modest 5-basis-point sequential increase in the company's cost of funds. Instead, it declined 10 basis points quarter-on-quarter to 7.20%. The brokerage traced the improvement not to cheaper new bond issuance but to a shift in the borrowing mix: money-market instruments now account for roughly 52% of total borrowings, supplemented by gains from the company's hedged funding book. Asset yields held up well too, slipping only 10 basis points to 8.90%. Together, the two moves left net interest income at Rs 968 crore, ahead of the brokerage's Rs 906 crore forecast.

A Credit Cost That Won't Repeat

Impairment charges of just Rs 16 crore translated into an annualized credit cost of 5 basis points — well below the company's own full-year guidance of 10 to 15 basis points. The brokerage was explicit that this shouldn't be read as a new normal: the low figure was driven by a roughly Rs 2,300 crore loan-assignment transaction that triggered a release of Stage 1 provisions, combined with the absence of any incremental macroeconomic overlay. Management itself characterized the quarter as a one-off. Underlying asset quality, meanwhile, remained pristine, with gross non-performing assets at 0.27% and net non-performing assets at 0.11% — among the strongest readings in India's housing-finance sector.

"We retain our FY27E estimates, continue to value the stock on FY27E ABVPS, and maintain our BUY rating with a Target Price of INR 107," the brokerage wrote, even as it flagged the credit-cost figure as unlikely to repeat.

Growth Outpacing the Industry, With a Mix Shift Underway

Gross disbursements rose 33.1% year-on-year to Rs 19,500 crore, running well ahead of assets-under-management growth of 24.2% and starkly outpacing the broader home-loan industry, which the brokerage expects to grow just 9% to 10.5% this year. Management reiterated full-year AUM growth guidance of approximately 24%, roughly in line with the prior year. A structural shift is also underway in the loan book: the higher-margin "Sambhav" affordable-and-near-prime segment, which carries spreads 150 to 200 basis points above prime mortgages, is expected to grow from about 16% of assets under management to roughly 20% by the end of the fiscal year, with management targeting monthly disbursements north of Rs 600 crore in that segment.

Financial Summary

Metric (Rs crore, FY-end March)	FY26	FY27E	FY28E
Net Interest Income	3,752	3,914	4,848
Pre-Provision Operating Profit	3,533	3,820	4,471
Net Profit	2,560	2,831	3,443
EPS (Rs)	3.06	3.40	4.12
Adjusted Book Value per Share (Rs)	26.9	30.4	—

Management guided for full-year return on assets of 2.1% to 2.3% and return on equity of 12.5% to 13%, underpinned by a gradual rise in balance-sheet leverage toward roughly 6.1 times by year-end from the company's currently under-leveraged, post-IPO position.

Key Risks for Investors

Margin compression could exceed guidance: Aggressive pricing by public-sector lenders — State Bank of India is offering home loans at 8.25% — could accelerate balance transfers away from the company. If that happens, or if the recent funding-cost benefit reverses, margin erosion could exceed management's guided 20-to-25-basis-point range for the year.

Credit cost will normalize higher: The quarter's 5-basis-point credit cost benefited from a one-off provisioning release. As costs revert toward the guided 10-to-15-basis-point range, provisioning will rise in absolute terms — and the relatively unseasoned Sambhav portfolio, of which roughly Rs 9,000 crore has originated in just the past 12 to 18 months, remains untested through a full credit cycle.

Return-ratio expansion hinges on leverage normalization: Management's profitability targets assume balance-sheet leverage rises steadily from its current under-leveraged position. Any delay, or regulatory constraints on lending thresholds that cap growth in higher-yielding segments, could keep returns below the guided range and make the current valuation multiple harder to justify.

Promoter stake overhang: Parent Bajaj Finance still holds 86.70% of the company, well above the SEBI-mandated 75% ceiling for public shareholding. Further mandated stake sales over the compliance period could create temporary selling pressure on the stock.

Sources: DRChoksey FinServ Pvt. Ltd. (Deven Choksey Research), "Bajaj Housing Finance Ltd. — Strong Q1 performance, with margin resilience and benign credit costs offsetting the funding build," Result Update, dated July 31, 2026; company disclosures and analyst estimates cited therein.

Market risk disclaimer: Investments in securities markets are subject to market risks. Ratings, target prices and estimates cited above reflect the originating brokerage's views as of the report date and are not guarantees of future performance. This article is for informational purposes only and does not constitute investment advice; readers should consult a qualified financial advisor and review official disclosures before making investment decisions.

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