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Bajaj Housing shares may dive 21%, believes Kotak Equities. Initiates coverage with Rs 100 target


Published on 2025-01-03 04:00:48 - MSN
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  • Kotak Institutional Equities has initiated a "sell" rating on Bajaj Housing Finance, citing expensive valuations and a potential 21% downside risk. The brokerage expects 25% earnings growth over FY2024-27E but projects flat margins and moderate RoE.

Kotak Institutional Equities has initiated coverage on Bajaj Housing Finance with a "reduce" rating and set a target price of Rs 100, suggesting a potential 21% decline from its current market price. The brokerage firm highlights that Bajaj Housing Finance, despite its strong parentage and robust growth, faces challenges due to its high valuations compared to other housing finance companies. Kotak points out that the company's return on assets (RoA) and return on equity (RoE) are expected to be lower than its peers, and its cost of funds is higher. Additionally, the firm notes that while Bajaj Housing Finance has a diversified product mix and a strong distribution network, its growth in assets under management (AUM) might not translate into superior profitability due to these factors. The analysis also considers the competitive landscape and regulatory environment, which could further impact the company's performance.

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