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The initial public offering (IPO) of Bajaj Housing Finnace has seen massive interest from retail investors as the public issue has been subscribed over 4 times on Day 2 of its bidding.
The Bajaj Housing Finance IPO was subscribed 4.56 times overall, with the retail portion subscribed 3.17 times, the Qualified Institutional Buyers (QIB) segment subscribed 1.89 times, and the Non-Institutional Investors (NII) category saw 10.77 times subscription as of 1:31 PM on September 10, 2024.
Expected listing gains in the grey market have also seen a jump for Bajaj Housing Finance IPO. The expected listing gains for the IPO surged to 91.43%.
The grey market premium (GMP) for Bajaj Housing Finance IPO, updated at 09:57 AM on September 10, 2024, is Rs 64. With a price band of Rs 70, the estimated listing price is Rs 134 (cap price plus the current GMP), indicating an expected gain of 91.43% per share.
Bajaj Housing Finance, a major player in India’s housing finance sector, stands out as the country’s second-largest housing finance company (HFC) and the eighth-largest non-banking financial company (NBFC) by assets under management (AUM).
The company has demonstrated impressive growth, with a compound annual growth rate (CAGR) of 30.9% in AUM from Fiscal 2022 to 2024.
Should you subscribe?
Rajan Shinde, Research Analyst at Mehta Equities, said, “We believe Bajaj Housing Finance Ltd IPO gives investors an opportunity to invest in one of India’s leading players in the housing finance sector.”
He also noted the company’s omnichannel sourcing strategy, vast geographic reach, and focus on cross-selling as positives that have enabled it to capture significant market share.
“By looking at the financials, the company has shown substantial growth in revenue from operations—50.4% in FY 2023 and 34.5% in FY 2024—and net profit growth of 77.2% in FY 2023 and 37.6% in FY 2024. At the upper price band of 70, the issue is asking for a market cap of Rs 58,297 crore. Based on FY 2025 annualised earnings and fully diluted post-IPO paid-up capital, the company is asking for a price-to-book value (PBV) of 2.96x, which is in line with its listed peers trading at an average PBV of 3x,” Shinde explained.
“BHFL’s well-defined credit evaluation framework, robust in-house collections infrastructure, and focus on low-risk, high-growth mortgage-centric markets position it well for sustained long-term growth,” Shinde said. “Considering all attributes, we recommend investors to SUBSCRIBE to the Bajaj Housing Finance Ltd IPO for a long-term perspective,” he added.
Shivani Nyati, Head of Wealth at Swastika Investmart Ltdalso supports the IPO, highlighting BHFL’s strong heritage under the Bajaj brand and its consistent revenue and profit growth. Nyati notes the IPO’s reasonable valuation and the high anticipation surrounding it, recommending subscribing for potential listing gains and long-term value appreciation.
Brokerage firm Anand Rathiin a note, said the upcoming IPO could act as a catalyst for Bajaj Finance’s re-rating, given BHFL’s robust asset quality and high return on assets (RoA).
The firm’s strong loan growth and best-in-class asset quality are expected to attract significant demand.
The brokerage highlights the IPO’s attractive entry point, with BHFL trading at 3.7x standalone FY26e book value. The analysts also note that the company’s capital requirements are expected to decrease with further offerings, making it a potentially lucrative investment.
Meanwhile, Master Capital Services highlights BHFL’s rapid growth and market presence as a non-deposit-taking HFC.
The company’s focus on expanding its market share through technology and risk management is seen as a strategic advantage.
(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.)