Bajaj Housing Finance IPO Day 1: Should You Invest?
Bajaj Housing Finance Limited (BHFL), a significant player in India’s housing finance sector, is preparing to launch its Initial Public Offering (IPO). On Friday, September 6, the company announced that it has secured ₹1,758 crore from anchor investors ahead of its public share-sale.
The public subscription period for the eagerly awaited Bajaj Housing Finance IPO will start on September 9 and conclude on September 11. The IPO’s price band has been set between ₹66 and ₹70 per share for the public offering.
For the Bajaj Housing Finance IPO, allocations are as follows: up to 50% of the shares are reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and at least 35% for retail investors.
Additionally, Bajaj Housing Finance has reserved shares worth up to ₹500 crore for shareholders. This portion is designated for individuals and Hindu Undivided Families (HUFs) who hold shares in the company’s promoters.
Beyond the standard allocations for retail, institutional, and non-institutional investors, there is a specific quota set aside for existing shareholders, a common practice in IPOs where the company’s parent is already publicly listed. This quota is intended as a special benefit for the shareholders of the parent company.
Bajaj Housing Finance, a non-deposit housing finance firm, has been offering mortgage loans since the fiscal year 2018. It operates as a subsidiary of the Bajaj Group, specifically Bajaj Finance Ltd, which is in turn part of Bajaj Finserv Ltd. According to reports, Bajaj Finserv holds a 51.34% stake in Bajaj Finance.
Bajaj Housing Finance IPO Subscription Status
On the first day of its subscription, the Bajaj Housing Finance IPO was subscribed 2.02 times, according to BSE data.
The initial share sale attracted bids for 1,46,70,35,056 shares, compared to the 72,75,75,756 shares available.
- Retail Investors: Subscribed 1.51 times
- Non-Institutional Investors (NIIs): Subscribed 4.35 times
- Qualified Institutional Buyers (QIBs): Subscribed 1.07 times
- Employee Portion: Subscribed 32%
- Shareholder Portion: Subscribed 2.90 times
Bajaj Housing Finance IPO Review
Swastika Investmart Ltd: The brokerage notes that Bajaj Housing Finance benefits from the well-established Bajaj Group legacy. The company has demonstrated consistent sales and profit growth along with robust financial metrics. The IPO is considered reasonably valued, and there is significant demand and anticipation surrounding it.
IPO Subscription Recommendation
We recommend subscribing to the Bajaj Housing Finance IPO to potentially benefit from both listing gains and long-term value growth, given the company’s strong track record, impressive financial performance, and positive market outlook.
StoxBox Analysis
According to StoxBox Research Analyst Prathamesh Masdekar, Bajaj Housing Finance, with an Asset Under Management (AUM) of ₹971 billion as of Q1FY25, is the largest non-deposit-taking Housing Finance Company (HFC) promoted by Bajaj Finance. Operating since FY18, it focuses on mortgage lending with a network of 215 branches. The company concentrates its efforts on the top 20-30 cities and has a significant presence in the top 8 metro areas.
Between FY22 and FY24, the company’s AUM grew at a compound annual growth rate (CAGR) of 30.9%. The firm is ranked as the fourth fastest-growing NBFC in India’s upper-layer category by the RBI. Its strategic focus on direct home loan origination and increasing the Average Ticket Size has led to strong performance.
The IPO is considered fairly valued based on its FY24 book value, with a Price-to-Book Value (P/BV) ratio of 3.8x at the upper end of the price band. Given its robust credit underwriting and risk management practices, the analyst recommends a “Subscribe” rating for the issue.
Bajaj Housing Finance IPO Details
The IPO includes an Offer for Sale (OFS) of equity shares worth ₹3,000 crore by the parent company Bajaj Finance, and a new issue of equity shares up to ₹3,560 crore.
The purpose of the offering is to comply with the Reserve Bank of India (RBI) directive for higher layer non-banking financial companies (NBFCs) to be listed on stock exchanges by September 2025. The proceeds from the new issue will be used to bolster the company’s capital base for future growth.
The book running lead managers for the IPO are Axis Capital Ltd, Goldman Sachs (India) Securities Private Ltd, SBI Capital Markets Ltd, JM Financial Ltd, IIFL Securities Ltd, and Kotak Mahindra Capital Company Ltd.
Grey Market Premium (GMP) Insights
As of today, the Bajaj Housing Finance IPO GMP stands at +56, indicating that shares are trading at a premium of ₹56 in the grey market. This suggests that the estimated listing price of the shares could be around ₹126 each, based on the upper end of the IPO price band and current grey market premium, which represents an 80% increase from the IPO price of ₹70.
Recent grey market activities show an upward trend in GMP, reflecting strong potential for the IPO listing. Experts on investorgain.com note that the GMP has ranged from ₹36 to ₹60 in recent sessions, with the current trend indicating investor enthusiasm and a willingness to pay more than the issue price.
