The Bajaj Housing Finance IPO has garnered substantial interest, achieving full subscription on its opening day, September 9, 2024. The IPO was oversubscribed overall by 1.80 times, reflecting strong investor enthusiasm. Specifically, the retail category saw a subscription rate of 1.52 times, while Qualified Institutional Buyers (QIBs) subscribed 0.52 times, and Non-Institutional Investors (NIIs) exhibited a particularly high interest with a subscription rate of 4.03 times.
This IPO offered a total of 68,60,00,009 shares to the public but received bids for 1,23,59,59,996 equity shares, underscoring a high level of demand among investors. Bajaj Housing Finance, recognized as a major player in India’s housing finance market, is positioned 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's performance has been robust, with a compound annual growth rate (CAGR) of 30.9% in AUM from Fiscal 2022 to 2024. This growth is attributed to the company’s effective business strategies and strong market presence.
Several analysts have recommended subscribing to the IPO, highlighting the company's promising financial metrics. Rajan Shinde, Research Analyst at Mehta Equities, notes that Bajaj Housing Finance's extensive geographic reach, omnichannel sourcing strategy, and focus on cross-selling are key strengths that contribute to its market dominance. The company reported significant growth in revenue and net profit: revenue from operations increased by 50.4% in FY 2023 and 34.5% in FY 2024, while net profit grew by 77.2% in FY 2023 and 37.6% in FY 2024. The IPO’s upper price band of Rs 70 reflects a market cap of Rs 58,297 crore, with a price-to-book value (PBV) of 2.96x, which is comparable to its listed peers trading at an average PBV of 3x. Shinde advocates for the IPO as a long-term investment opportunity.
Shivani Nyati, Head of Wealth at Swastika Investmart Ltd, supports the IPO, emphasizing the Bajaj brand's strong heritage and consistent financial performance. She points out that the IPO is attractively priced and presents potential for both immediate listing gains and long-term appreciation.
Brokerage firm Anand Rathi suggests that the IPO could act as a catalyst for re-rating Bajaj Housing Finance, given the company's solid asset quality and high return on assets (ROA). The firm's strong loan growth and superior asset quality are expected to drive significant investor interest. Anand Rathi also highlights the IPO's appealing entry point, noting that BHFL is currently trading at 3.7x standalone FY26e book value.
Master Capital Services commends BHFL for its rapid growth and substantial market presence as a non-deposit-taking HFC. The company’s focus on leveraging technology and effective risk management strategies is viewed as a strategic advantage.
As of the latest update on September 9, 2024, the Grey Market Premium (GMP) for the IPO stands at Rs 59.50. With the IPO's price band set at Rs 70, this indicates a projected listing price of Rs 129.50, which suggests an expected gain of 85% per share. The strong GMP further reflects investor confidence in the offering and potential for significant returns.
Â
