Bajaj Housing: Stock gets 30% upside target as HFC bets on operating efficiency, credit quality

Bajaj Housing Finance, whose shares have fallen 26 per cent in 2025 so far, received a 'Buy' rating from ICICI Securities and a target of Rs 125, hinting at 30 per cent potential upside over the prevailing price. It cited Bajaj Housing's strategic focus on optimising asset under management (AUM) mix by 2-3 per cent to enhance profitability and said the full mortgage product stack to ensure growth sustainability. Bajaj Housing it said has demonstrated its dominance in mortgage segment since its entry into the business in FY18, evident in a steady increase in the market share, with its AUM growing 23 per cent from FY23-25, much ahead of banks and its peer HFCs. It sees the home loan market to grow at 14-16 per cent CAGR until FY28. 
 
The domestic brokerage said Bajaj Housing's focus remains on outpacing industry growth of 14-16 per cent compounded annually till FY28, on account of operating efficiency and credit quality. Bajaj Housing, ICICI Securities said, expects operating expenses (opex) to net total income (NTI) to moderate to 14-15 per cent over the medium term from the current level of 20 per cent. 

"BHFL is positioned for sustained outperformance driven by its clear focus on prime home loans and LRD which together deliver scale with structurally low credit risk. Despite operating in a bank-dominated mortgage industry (75 per cent market share by private and public banks combined), BHFL has steadily increased its home loan market share from 1 per cent to 1.6 per cent over FY20–25 with 10-15bps yearly improvement in market share," ICICI Securities said.  

This was despite HFCs’ overall share moderating from 21.3 per cent in FY20 to 18.3 per cent in FY25. 

ICICI Securities said Bajaj Housing is targeting 5 per cent share in incremental home loan originations against current 2.5-2.7 per cent, offering a significant runway for calibrated portfolio compounding.

"BHFL grew higher than the industry in FY23-25 with AUM growth of 23 per cent wherein HFCs/PSBs/ private sector banks were able to grow at less than 15 per cent. This was despite heightened competition from peers with respect to lending rates," it said.