In September 2024, Bajaj Housing Finance made its much-anticipated debut on the Indian stock exchanges. The excitement among investors was natural. After nearly 17 years, a company from the Bajaj Group was coming to the primary markets, and expectations were sky-high. The IPO was priced in the range of ₹66 to ₹70, but the listing surprised everyone when the stock debuted around ₹150, delivering nearly 140% listing gains.
Given the long and successful track record of Bajaj Group companies, investors were quick to draw parallels with past wealth creators. Bajaj Finance has delivered around 1700% returns over the last 10 years, translating into a compounded annual growth rate of nearly 32.8%. Bajaj Auto has grown almost five times over the same period, while Bajaj Finserv has surged more than 3300% over the last 18 years. With such examples fresh in memory, many investors assumed that Bajaj Housing Finance would follow a similar multibagger trajectory.
This optimism soon turned into aggressive buying. Even after the spectacular listing at ₹150, retail investors continued to pile into the stock. Within a few days, the share price crossed ₹180. However, nearly one and a half years after listing, the reality looks very different. The stock is now trading close to ₹88, which means it has corrected nearly 50% from its all-time high. This sharp fall has left many investors confused and concerned, especially since Bajaj Housing Finance is part of the same trusted Bajaj Group.
The key question investors are now asking is simple: what went wrong? Is there a problem with the company’s fundamentals, management, or business model? Or is this fall purely a result of valuation excesses and broader market conditions?
To begin with, there is little doubt about the quality of Bajaj Housing Finance’s business. The company operates in the housing finance space, which is considered relatively stable and long-term in nature. The core issue behind the sharp correction was already visible around the time of the IPO itself. The valuation at which the company came to the market was aggressive, even by Bajaj Group standards.
At the IPO price of around ₹70, the company was valued at nearly 3.7 times its book value. As the stock rallied post-listing, the price-to-book multiple expanded sharply and touched around 6.4 by December 2024, making it one of the most expensive stocks in the housing finance space. In comparison, peers like PNB Housing Finance were trading close to one times book value, while LIC Housing Finance was available at around 0.7 times book value. While a strong brand and superior asset quality do deserve a premium, such a steep valuation gap was difficult to justify.
On the growth front, Bajaj Housing Finance has seen a natural slowdown. This is not unusual, as growth rates tend to moderate as companies scale up. In the December 2025 quarterly results, revenue grew by around 18% and net profit by approximately 20%. Just two to three years ago, both revenue and profit were growing at more than 30–40%. The slowdown in growth, combined with stretched valuations, became a trigger for the stock’s correction.
Despite this, the business fundamentals remain strong. The company benefits immensely from the Bajaj brand and its distribution network, which keeps customer acquisition costs significantly lower than many competitors. This competitive advantage is clearly visible in its performance. Assets under management grew by around 23% in the latest quarter, with the total loan book now standing close to ₹1.3 lakh crore. Management has guided for sustained growth of 21–23% going forward.
In lending businesses, the most critical factor is asset quality. Growing a loan book is relatively easy, but maintaining its quality is the real challenge. On this front, Bajaj Housing Finance stands out. Its gross non-performing asset ratio is just 0.26%, among the best in the industry. In comparison, several competitors operate with GNPA levels closer to or above 1%.
The company’s loan book is also largely secured. Around 50% of its loans are home loans, primarily given to salaried individuals. The rest consists mainly of loans against property and loans against rental income. Since these loans are backed by tangible assets, the risk profile remains relatively conservative compared to unsecured lending segments like personal loans or credit cards.
Return on equity, however, remains an area where improvement is needed. Currently, the company’s ROE is around 12%, which is reasonable but not exceptional. As the business matures and operating leverage improves, there is scope for better returns over time.
So where exactly is the problem? The answer lies in valuation, which is where most retail investors tend to make mistakes. A great business bought at an unreasonable price can deliver disappointing returns, at least in the medium term. This has been seen repeatedly across sectors and market cycles. Examples include companies like Zomato and DMart, where strong brands and businesses struggled to justify stretched valuations once growth moderated.
At current levels near ₹88, Bajaj Housing Finance does not appear cheap, but it no longer looks excessively overvalued either. The stock appears fairly valued. However, the possibility of further downside cannot be ruled out, especially if broader markets remain volatile. If the share price were to approach levels closer to ₹70, valuations would become far more attractive from a long-term perspective.
For aggressive investors with a higher risk appetite, current levels may offer a gradual entry opportunity. Conservative investors, however, may prefer to wait for a more comfortable margin of safety. Patience is often rewarded in equity markets, but it also comes with the risk that a stock may never revisit deeply attractive valuations.
An important positive development across the Bajaj Group is the increasing use of artificial intelligence. In a recent conference call, Bajaj Finance management highlighted how AI is being used extensively to analyze customer calls, understand demand patterns, identify pain points, and design better financial products. While this commentary was specific to Bajaj Finance, it is reasonable to expect that similar technological capabilities will gradually be implemented across group companies, including Bajaj Finserv and Bajaj Housing Finance. Over the long term, such initiatives can strengthen growth and profitability.
Looking ahead, Bajaj Housing Finance is expected to continue growing its business at around 20–22% annually. Even if valuation multiples remain stable for a year or two, long-term investors who stay invested through business cycles may still benefit from compounding over time. The company’s fundamentals, brand strength, and asset quality remain intact.
The broader lesson from this episode is clear. No matter how strong a business is, valuation cannot be ignored. As Warren Buffett famously said, it is better to buy a wonderful company at a fair price than a fair company at a wonderful price. India offers no shortage of quality companies, but finding them at fair or undervalued prices requires patience and discipline.
In conclusion, Bajaj Housing Finance remains a high-quality business backed by a trusted group. The sharp 50% correction was driven primarily by valuation excesses rather than any serious deterioration in fundamentals. For investors, the decision now hinges on risk appetite, time horizon, and patience. Those willing to wait for the right valuation may find better opportunities ahead, while long-term believers in the business may choose to accumulate gradually, keeping expectations realistic.
This article is for informational and educational purposes only. It does not constitute investment advice, financial guidance, or a recommendation to buy or sell any security. Stock market investments are subject to market risks. Readers are advised to consult a certified financial advisor before making any investment decisions. The author and publisher are not responsible for any financial losses arising from the use of this information.
