Cash News
The Rs 6,560 crore IPO of Bajaj Housing Finance has opened for public subscription today, with a price band set at Rs 66-70 per share.
Investors are anticipating strong listing gains, as indicated by the company’s grey market premium (GMP), which currently stands at Rs 55-57 per share, suggesting a potential premium of over 80%. The IPO will close on September 11.
The proceeds from this public offering will be used to strengthen Bajaj Housing Finance’s capital base, positioning it to meet future business needs.
Backed by the Bajaj Group, the company provides a wide range of mortgage products, including home loans, lease rental discounting, and developer financing.
As the largest non-deposit-taking housing finance company (HFC) in India, Bajaj Housing Finance reported a net profit of Rs 1,731 crore for FY24, marking a 38% year-on-year growth.
Latest GMP
As per grey market trends, Bajaj Housing Finance shares are commanding a premium of Rs 55-57 per share, translating to a potential upside of over 80% against the issue price.
The grey market premium reflects investor expectations of a strong debut on the stock exchanges. However, it’s important to note that GMPs are speculative and can fluctuate, providing only an indicator of unlisted market sentiment.
Key dates: Allotment and listing schedule
IPO Opening Date: September 9, 2024
IPO Closing Date: September 11, 2024
Basis of Allotment: September 14, 2024
Refunds Initiated: September 15, 2024
Shares Credited to Demat Accounts: September 16, 2024
Listing Date: September 16, 2024
Brokerage view
Multiple brokerages have expressed optimism regarding the IPO.
Emkay Global highlighted the company’s strong parentage, best-in-class credit rating, and impressive management, stating that these factors position Bajaj Housing Finance well in the housing finance space.
SBI Securities also noted the company’s potential to capitalize on expected growth in the housing finance industry, projecting 13-15% growth in the sector over the next three years.
Anand Rathi Research underscored the upcoming Rs 70 billion fundraise through Bajaj Housing Finance as a likely catalyst for Bajaj Finance’s re-rating. The brokerage estimates a valuation of Rs 560 billion-590 billion for Bajaj Housing Finance, noting that the standalone entity of Bajaj Finance delivers higher RoE and RoA than its housing finance arm, commanding premium valuations.
With strong asset quality (GNPA at 1.4%) and rapid loan growth (13.2% over FY19-24), the IPO is expected to attract significant demand. “At our 12-month target price, Bajaj Finance will trade at 4.4x FY26 estimated BV, with subsidiaries valued at â¹837 per share,” Anand Rathi stated.
The public offer will help Bajaj Housing Finance comply with the Reserve Bank of India’s regulation requiring upper-layer NBFCs to be listed by September 2025. With its strong brand equity, backed by the Bajaj Group, the company looks well-positioned to sustain its growth trajectory.
Key risks
While the outlook remains positive, brokerages have cautioned against potential risks, including regulatory changes and key-man risks, which could impact the company’s future performance.
The IPO shares are expected to list on stock exchanges on September 16.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)