Beaten-down stocks Part 7: Bajaj Housing Finance dip may be investors' gain

The stock is down 28.6% since September last year, with its price to book value more than halving over the period after a stellar IPO and listing

Non-banking financial company Bajaj Housing Finance has taken centre stage in the current market environment. Its stock has fallen 27.1 per cent over the past year. Yet it offers a combination of relatively low valuations, steady earnings in recent quarters, and a return on net worth of 11.3 per cent. This mix provides investors with downside protection in a weak market along with the potential for gains once sentiment improves.

 

India’s equity market as a whole has faltered after two consecutive years of strong double-digit growth. The benchmark BSE Sensex declined 4.8 per cent in the 12 months to September 2025, its weakest annual performance in more than a decade. This compares with a 28.1 per cent surge in the year to September 2024 and a 14.6 per cent increase in the prior year. As a result, the index has now posted negative returns in three of the past six years ended September.

 

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The latest decline has, however, eased valuations from the record highs of 2024. Several blue-chip counters are now trading at more attractive levels, presenting opportunities for long-term investors. Still, caution remains essential as valuations in the broader market continue to stand above long-period averages, making careful stock selection critical. 

Why buy Bajaj Housing Finance?

 

• Share price correction: The stock is down 28.6% since September last year, with its P/BV more than halving over the period after a stellar IPO and listing.
• Valuation reset: Trailing P/E has eased to a more reasonable 40.5x from a steep 73.2x in September 2024, reflecting a sharp moderation in valuations.
• Strong growth momentum: Gross interest income rose 18.7% Y-o-Y and net profit climbed 20.9% Y-o-Y in Q1FY26, making it one of the fastest-growing mortgage lenders.
• Positive outlook, but richly valued: Motilal Oswal Securities projects 22% CAGR in assets and net profit over three years, but expects only gradual recovery in the stock price due to still-elevated valuations.

 

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