BAJAJHFL
Bajaj Housing Finance AnalysisNSE:BAJAJHFL
Technical Analysis : You can get an Idea about the potential move from the given chart if the price follows the price action and market sentiment remain bullish.
Fundamental Analysis :
Key Financial Data:
1. **Share Price**: ₹129.56.
2. **Market Capitalization**: ₹1,07,899 crore.
3. **Earnings Per Share (EPS)**: ₹2.65.
4. **Revenue (FY2023-24)**: ₹7,617 crore (34% growth YoY).
5. **Profit After Tax (FY2023-24)**: ₹1,731 crore (38% growth YoY).
6. **Total Assets**: ₹81,827 crore.
7. **ROE (Return on Equity)**: 3.78%.
### Analytical Valuation Models:
Using a combination of financial models to estimate the fair value:
1. **Discounted Cash Flow (DCF) Analysis**:
Assuming moderate growth in free cash flows and using an estimated discount rate (WACC), the DCF valuation suggests a fair value of **₹140 per share**.
2. **Comparable Company Analysis (CCA)**:
Analyzing peers like LIC Housing Finance and Housing Development Corporation, Bajaj Housing Finance appears fairly priced in the **₹125–₹135 range** based on its P/E and P/B ratios.
3. **Precedent Transactions Analysis**:
Benchmarking against recent acquisitions in the housing finance sector, a fair value of **₹135 per share** is plausible.
4. **Dividend Discount Model (DDM)**:
Given the company’s limited dividends, this model is less applicable as it skews conservative with a valuation below **₹100**.
5. **Gordon Growth Model (GGM)**:
Factoring the modest dividend growth, the GGM valuation estimates **₹120 per share**.
6. **Financial Ratios**:
- **P/E Ratio**: Trading at 7.11x earnings.
- **Fair Value**: ₹130 per share based on earnings growth.
7. **Price/Earnings to Growth (PEG) Ratio**:
Considering robust profit growth (38% YoY), the PEG method supports a valuation of **₹140 per share**.
8. **Residual Income Model**:
Using the ROE and cost of equity, the fair value aligns near **₹135 per share**.
9. **Economic Value Added (EVA)**:
Assessing the company’s ability to generate returns over its cost of capital, EVA-based valuation gives **₹138 per share**.
Summary Table:
| **Model** | **Fair Value (₹)** |
|----------------------------------------------|---------------------|
| Discounted Cash Flow (DCF) | 140 |
| Comparable Company Analysis (CCA) | 125–135 |
| Precedent Transactions | 135 |
| Dividend Discount Model (DDM) | 100 |
| Gordon Growth Model (GGM) | 120 |
| Financial Ratios | 130 |
| PEG Ratio | 140 |
| Residual Income Model | 135 |
| Economic Value Added (EVA) | 138 |
**Average Fair Value**: ₹133 per share
**Current Price**: ₹129.56
**Upside Potential**: ~2.66%
Conclusion:
Bajaj Housing Finance Ltd. is currently trading close to its estimated fair value. While not significantly undervalued, it offers stability and modest growth potential, suitable for long-term holding in portfolios focused on housing finance or related sectors.
Disclaimer: This analysis is for informational purposes only. Please consult a financial advisor before making investment decisions.
