Top 5 Reasons for Bajaj Housing Finance Limited Stock Downfall & The Way Ahead
Get ready to uncover the top five reasons behind the downfall of Bajaj Housing Finance Limited, a non-deposit taking Housing Finance company that more than doubled in value just days after its IPO, only to see its stock decline over 40% from its peak.
- Here are 22 clean bullet points summarizing the video:
- * Bajaj Housing Finance Limited (BHFL) listed at a price of ₹150, more than double its issue price of ₹70
- * The company's stock price has since declined by over 40% from its peak
- * Today's video will discuss the top five reasons for the downfall and what lies ahead
- What does the company do?
- * BHFL is a non-deposit taking Housing Finance Company, operating as a subsidiary of Bajaj Finance Limited
- * The company focuses on mortgage lending services, with four main types:
- + Loan Against Property (LAP)
- + Lease Rental Discounting (LRD)
- * BHFL's P/BV ratio is high compared to its peers (4.93 vs. HUDCO - 2.04, LIC Housing Finance - 0.95, and PNB Housing Finance - 1.41)
- * The company's key parameters are good:
- Reason 2: End of Anchor Investor Lock-in Period
- * Anchor investors typically hold their shares for a certain period before selling
- * When the lock-in period ends, anchor investors may sell their shares, contributing to market volatility
- * On October 12, 2024, the stock fell by almost 6% after the first 30-day lock-in period ended
- Reason 3: Sector-wide Selloff
- * The entire NBFC sector is down:
- + LIC Housing Finance -31%
- + PNB Housing Finance -28%
- + Aadhar Housing Finance -25%
- + APTUS Value Housing Finance -20%
- Reason 4: Market Sentiment
- * The overall market sentiment is negative, with the economy experiencing a slowdown:
- + GDP actual growth rate is lower than expected
- + Housing and auto sales are declining
- Reason 5: Q3 FY25 Results (Question Mark)
- * BHFL's Q3 FY25 results were good:
- + Assets under management up by 26% YoY
- + Loan assets up by 31% YoY
- + Net total income up by 25% YoY
- * However, the company's ROE dropped due to an increase in the number of shares
- * Management plans to focus on affordable housing, digital transformation, and lease rental discounting
- * Long-term performance has been good:
- + Revenue growth: 28% CAGR over 4-5 years
- + Net profit growth: 36% CAGR over 4-5 years
Source: CA Rachana Phadke Ranade via YouTube
❓ What do you think? What are the long-term implications of a stock's valuation being higher than its peers, but still experiencing a decline in value due to market conditions? Feel free to share your thoughts in the comments!