Bajaj Housing Finance Share Price: Bajaj Housing Finance shares tumble 11% in 2 days. Should you buy, sell or hold?

IPO investors who got the allotment of the issue, however, are still sitting on gains of 130%.

Despite this fall and high valuations, analysts believe that the company is very typically supported by the heritage of the Bajaj Group and the wealth creation that has happened inside the group, the management quality, the integrity as well as the industry that it functions into.

Post the stock’s listing, the domestic brokerage firm PhillipCapital has also initiated coverage on the stock with a target price of Rs 210.

“We believe BHFL is in a league of its own, with its focus on the ‘desirable’ sweet spot for many home loan (HL) aspirants – a ticket size of Rs 5mn. This way, it addresses c.65% of home-loan originations in India. It is increasingly focusing on Lease Rental Discounting (LRD), a high-yield segment that provides operating leverage with scale,” said PhillipCapital in its report.

Out of the Rs 1.20 lakh crore market cap of the company, the total free float shares that are available for trading constitute just about 12% of the company’s equity.“This explains that about Rs 14,000-15,000 crore worth of floating stock is existing in the market. Beyond that, I think it is not available in the market. Against which every single fund probably wants to buy into the portfolio,” said Deven Choksey, Managing Director at DRChoksey FinServ.Choksey explained that the company is growing at a compounded rate of growth of around 30%, which means even if today the stock is quoting at 7-7.5 times price to book value, at 30% rate of growth, if one averages it out three years forward, this is basically valued at around 3.5 times.

“So, frankly, from that perspective when you compare this company with others, it may sound a little bit more expensive even at 3.5 times price to book value three years forward. But still given the kind of diversity of the portfolio in the business model, this company assures that they are going at around 30% rate of cagr rate of growth, so they are always going to be trading at premium,” Choksey added.

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Given these facts, Deven Chowksey believes that if the market gives an opportunity to buy the stock at a lower level on any fall or any dip, that would be a right time to buy into the portfolio because though expensive, he recommends buying at a slight premium for a good quality stock in the portfolio.

“What supports this company is the base being lower, a huge database that this company has and I think the trust from the investors as well as the trust from the community who sort of borrows from that is also something which would help. As I said, these are more qualitative parameters,” said Devang Mehta of Spark Private Wealth.

Mehta advised that the stock should be a hold for somebody who has sort of bought allotment and for somebody who wants to buy, this (dip) is a good opportunity for a great company.

The shares of Bajaj Housing Finance were trading 6.3% lower at Rs 162.70 on BSE around 11 am.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)