Bajaj Housing Finance shares in focus ahead of Q2 results today

Q2 Results 2024 Live: An eventful day is expected on Dalal Street this Monday, October 21, as 46 companies across sectors are set to declare their quarterly results for the three months ending September 2024. The lineup includes major names such as Bajaj Housing Finance Ltd., Cyient DLM Ltd., UltraTech Cement Ltd., and Union Bank of India.

Notably, Bajaj Housing Finance Ltd. will announce its first quarterly results since its stock market listing on September 16, 2024. In provisional data filed on October 3, the company revealed that its assets under management (AUM) surged 26% year-on-year (YoY), reaching Rs 1.02 lakh crore for the quarter ended September 2024. The AUM saw an increase of approximately Rs 5,480 crore during the same period.

UltraTech Cement Ltd. is another key player set to reveal its Q2 performance. The cement giant’s Q1 results showed a marginal YoY net profit increase of 0.3% to Rs 1,695 crore. Investors will be watching closely to see how the company fared in the second quarter.

The company also reported a 14% year-on-year growth in new loans booked, with 9.69 million loans recorded in Q2FY25, compared to 8.53 million in Q2FY24.

Bajaj Housing Finance has emerged as one of the year’s most successful IPO listings, debuting with a premium of over 100% compared to its IPO price of Rs 70. On its listing day, the stock soared 135%, hitting a high of Rs 188.5.

Analysts are factoring in ambitious expectations of 24% and 23% compound annual growth rates (CAGR) for assets under management (AUM) and earnings per share (EPS), respectively, alongside a 16% average RoE over the period from FY24 to FY34.

Brokerage firm Ambit has initiated a ‘Sell’ rating on Bajaj Housing Finance, setting a target price of Rs 85, which indicates over 39% downside from the previous closing price of Rs 139.90 per share. This move comes amid concerns about the company’s valuation and market dynamics.

In its report, Ambit highlighted that the current valuation implies an ask rate of approximately 2x the industry’s growth rate. The report underscores that the prime home loans segment is a mature industry, heavily dominated by established banks. As such, the competitive dynamics within this space are expected to weigh on loan growth and return on equity (RoE).

While the firm noted that non-housing loans could potentially contribute positively to growth and RoE, they also entail higher risks that may become apparent during downturns in the real estate market.

Ambit’s report points out that Bajaj Housing Finance’s current valuation stands at 5.2x FY26E book value, which represents a 104% premium over its peers. This projection implies an aspiration to replicate the success of its parent company, Bajaj Finance.

With Thanks Reference to: https://www.msn.com/en-in/money/markets/bajaj-housing-finance-shares-in-focus-ahead-of-q2-results-today/ar-AA1sC0yH?ocid=BingNewsSerp and https://www.moneycontrol.com/news/business/earnings/q2-results-2024-live-news-updates-bajaj-housing-finance-union-bank-cg-power-hfcl-earnings-october-21-liveblog-12846231.html

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