After garnering a record subscription for its ₹6,560-crore initial public offering (IPO), shares of Bajaj Housing Finance, the finance service arm of Bajaj Finance, is expected to make a stellar debut on the domestic bourses on September 16. If grey market trends are to be believed, Bajaj Housing Finance shares are estimated to list at around ₹145.5 apiece, a premium of ₹75.5 (or 107.8%) over the upper end of the IPO price band of ₹66-70 per share. At this listing price, the market capitalisation (m-cap) of the company is pegged to be around ₹1.21 lakh crore, more than double from ₹58,300 crore at the time of the issue.
“Bajaj Housing Finance, backed by the reputable Bajaj Group, is set for a strong stock market debut. The IPO has garnered immense investor interest, evidenced by a subscription rate of 67.4 times and a sky-high grey market premium (GMP) of ₹75.5 (107.8%). This enthusiasm reflects the company's strong fundamentals and market anticipation,” says Shivani Nyati, Head of Wealth, Swastika Investmart.
The housing finance company has demonstrated consistent growth in both revenue and profit, showcasing favorable financial metrics. “The company's association with the Bajaj Group lends credibility and trust. Moreover, the IPO's valuation appears reasonable, further fueling investor optimism.”
“The combination of strong financials, a reputable brand, and immense investor interest positions Bajaj Housing Finance for a potentially successful listing,” she adds.
Another brokerage Master Capital Services says that the IPO will list with substantial gains, citing the latest market sentiments. “Investors can invest with a medium- to long-term view in Bajaj Housing financing because of its superior growth, widespread presence in the housing financing industry, group and management heritage, and competitive valuation compared to peers.”
With an asset under management (AUM) of ₹97,100 crore as of Q1 FY25, it places the company as the largest non-deposit-taking HFC backed by Bajaj Finance Ltd. During FY22–24, AUM increased by 30.9%, while profit increased by 56.2%, the brokerage says in a note.
The IPO of Bajaj Housing Finance, which comprised a fresh issue of ₹3,560 crore and an offer for sale of ₹3,000 crore by parent Bajaj Finance, was subscribed 67.43 times. The issue received the highest-ever number of applications (88.94 lakh) and bids worth ₹3.24 lakh crore at the upper end of the price band of ₹66-70 per share. This is the first time in 17 years that any company has topped ₹2 lakh crore mark in subscription amount after Coal India in 2008.
The offer received an overwhelming response from all three categories of investors, especially from the qualified institutional buyer (QIB) as the quota reserved for them was subscribed 222.05 times. The QIB segment alone received record bids worth ₹2.6 lakh crore.
The portion set aside for non-institutional investors (NIIs) was booked 43.98 times, while the retail segment received comparatively muted bids as the quota for them was subscribed 7.41 times. The employee portion was subscribed 2.13 times. Subscription in NII category was ₹38,659 crore and that in retail category was ₹15,195 crore at upper end of price band.
As per the DRHP filed with the SEBI, the company had reserved half of the issue for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and the remaining 35% for retail investors, including reservation for employees.
The housing finance company intends to use the net proceeds from issuance of fresh equities to augment its capital base to meet future business requirements of the company towards onward lending. Founded in 1926, the firm offers financial solutions such as home loans, loans against property, lease rental discounting, and developer financing to individuals and corporate entities to purchase and renovate homes and commercial spaces. As on March 31, 2024, it had a network of 215 branches spread across 174 locations in 20 states and three union territories, which are overseen by six centralised hubs for retail underwriting and seven centralised processing hubs for loan processing.
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