Bajaj Housing Finance IPO Review:The IPO of Bajaj Housing Finance, one of the country’s leading housing finance companies, has opened today on 9 September. The size of the IPO is Rs 6560 crore. While the company has fixed the price band for the IPO at Rs 66-70 / share. The IPO has a fresh issue of Rs 3560 crore and an OFS of Rs 3000 crore. This IPO will remain open till September 11, while the shares will be listed on BSE and NSE on September 16. Brokerage houses are also positive about this IPO.
Its valuation on the upper price band is around Rs 58,297 crore. Its lot size will be 214 shares, i.e. you will have to bid for at least 214 shares, after which bids can be placed in multiples of it. You will have to bid a minimum of Rs 14,980 on the upper price band.
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GMP reached 80%
There is a tremendous craze in the grey market for Bajaj Housing Finance. The unlisted stock of the company is seen at a price of Rs 55 to Rs 56 in the grey market. This is an 80 percent premium in terms of the upper price band of Rs 70. This indicates that the listing of the stock can happen at an 80 percent premium.
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Brokerage house Deven Choksey Research has given a subscribe rating to the IPO. According to the report, Bajaj Housing Finance’s price-to-book value multiple at the upper price band is 3.2x for the post-IPO book value of Rs 21.9 per share by June 30, 2024, which is reasonable compared to peers. The average price-to-book value for the industry is 3.0x. The brokerage house is positive on the company’s outlook due to the company’s substantial brand equity, strategic business expansion plan, wide geographic coverage and advanced technological infrastructure. According to the brokerage, these factors are expected to improve operational efficiency and maintain favorable credit costs supported by better asset quality.
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According to the brokerage house, the company has shown strong performance by strategically focusing on increasing direct home loan origination and increasing the average ticket size across its product group. These products have contributed to the improvement in the OPEX/Asset ratio in recent years. In addition, strategic changes in AUM and product mix have mitigated the adverse effects of rising funding costs on portfolio spreads. The issue is valued at a P/BV of 3.8x at the upper price band based on the book value of FY24, which looks fair. Therefore, one can subscribe to the IPO based on a strong credit underwriting process and risk management framework.
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These brokerage houses are also positive
According to brokerage house SBI Securities, the company is valued at 1QFY25 annualized P/BV multiple of 3.2x based on the upper price band on post issue capital. It is the second largest HFC in India with an AUM of Rs 97,071 crore. Bajaj Housing Finance has the lowest GNPA ratio of 0.28% and NNPA ratio of 0.11% among large housing finance companies. The company has an AUM growth of 30.9% and profit growth of 56.2% during the period FY22-24. The housing finance industry is expected to grow in the range of 13-15% over the next 3 years and Bajaj Housing Finance Limited is well positioned to capitalize on the growth in the housing finance sector.
According to brokerage house Emkay Global, the company’s strong parentage, best-in-class credit rating and effective management indicate positive signs. These factors put Bajaj Housing Finance in a strong position in the housing finance sector.
How much share is reserved for whom?
In the IPO, 50 percent of the share is reserved for qualified institutional buyers (QIB). While 35 percent is reserved for retail investors. At the same time, 15 percent is reserved for non-institutional investors (NII). The quota of employees has been kept at 5% (maximum) of ‘post offer paid up equity share capital’. The company will use the funds raised from the IPO to increase its capital base, so that funds can be arranged for future business needs. Meaning, the capacity to give loans can be increased.
Kotak Mahindra Capital, BofA Securities India, Axis Capital, Goldman Sachs (India) Securities, SBI Capital Markets, JM Financial Limited and IIFL Securities are the book-running lead managers to the issue.
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financial position of the company
Bajaj Housing Finance’s profit (PAT) in FY24 Q4 was Rs 381 crore. This is a growth of 26 per cent on an annual basis. At the same time, the net interest income of the company increased by 11 per cent on an annual basis and stood at Rs 629 crore. The company’s AUM grew 32 per cent year-on-year to Rs 91,370 crore. At the same time, the net total income increased by 14 per cent (YoY) to Rs 717 crore. There was also growth in the loan distribution of the company and it increased to Rs 11,393 crore.
(Disclaimer: The views or advice on the stock are given by the brokerage house. These are not the personal views of Financial Express. There are risks in the market, so take expert advice before investing.)
