Bajaj Housing Finance Limited (BHFL) is set to launch its highly anticipated Initial Public Offering (IPO) on 9th September 2024, making it the largest IPO of the year. The IPO will be open for subscription until 11th September 2024, offering investors a mix of fresh equity shares and an Offer for Sale (OFS). With an aim to raise ₹6,560 crore, this public issue has garnered significant interest in the market, especially from those tracking the Non-Banking Financial Company (NBFC) space. Here's a breakdown of all the key details surrounding the Bajaj Housing Finance IPO, including the grey market premium (GMP), shareholder quota, and important dates.
The public offering will include both fresh equity shares and shares offered by the existing shareholders through the OFS route. Investors interested in the IPO can apply within the price range of ₹66 to ₹70 per equity share.
The Grey Market Premium (GMP) is an indicator of the unlisted stock's demand in the market before its official listing. As of today, the GMP for Bajaj Housing Finance stands at ₹55, which has shown a significant jump from ₹42 before the company filed its Red Herring Prospectus (RHP) with the Securities and Exchange Board of India (SEBI). This 31% increase in GMP highlights growing confidence among investors.
A GMP of ₹55 indicates that investors in the grey market are willing to pay ₹55 more than the upper price band of ₹70, suggesting a high likelihood of a positive listing on the stock exchanges. This GMP, combined with the company’s strong financials and market presence, makes it an attractive proposition for investors seeking to capitalize on the IPO frenzy.
One unique aspect of the Bajaj Housing Finance IPO is the special allocation for shareholders of Bajaj Finance and Bajaj Finserv. Investors who held shares of either of these two companies as of the record date (31st August 2024) are eligible to apply under the shareholder quota. This gives an additional advantage to existing shareholders of Bajaj group companies, enabling them to participate in the IPO with potentially higher allocations.
To clarify, the shareholder quota record date is linked to the day the company filed its RHP, which was on 31st August 2024. Shareholders who held Bajaj Finance or Bajaj Finserv shares on or before 30th August 2024 can apply under this exclusive category.
Bajaj Housing Finance, an arm of the Bajaj Group, is well-established in the housing finance sector. The company has shown consistent growth, particularly in its Asset Under Management (AUM), which has grown at a compound annual growth rate (CAGR) of 30%. Moreover, Bajaj Housing Finance has maintained a healthy asset quality with non-performing assets (NPAs) below 1%, positioning itself as a stable and robust player in the industry.
However, some analysts have raised concerns over the valuation of the company compared to its peers. According to brokerage firm InCred Equities, Bajaj Housing Finance’s shares are being offered at 3.2 times their book value as of June 2024, post dilution and rights share adjustment. This makes the IPO price slightly more expensive than its competitors like LIC Housing Finance (1.2x), PNB Housing Finance (1.7x), and Can Fin Homes (2.7x).
Despite this, analysts remain optimistic due to the company's superior technology platform, diversified loan portfolio, and strong market position, all of which enable it to compete effectively in a tough environment. Investors should consider these factors when making their investment decisions.
The IPO will follow the 'T+3' listing rule, meaning the shares are likely to be credited to the investors' demat accounts by 16th September 2024, after the allotment is finalized on 12th September.
The Bajaj Housing Finance IPO has generated a lot of buzz, but potential investors should carefully weigh the pros and cons. On the positive side, the company's strong growth in AUM, low NPAs, and solid reputation as part of the Bajaj Group make it an attractive investment. The significant jump in GMP also suggests a favorable debut on the stock exchanges.
However, the high valuation compared to peers could be a concern for those looking for more reasonably priced options. The competitive housing finance sector, while lucrative, could add pressure on margins in the long term. Investors must also consider the overall market conditions and their risk appetite before making a decision.
Bajaj Housing Finance’s IPO is poised to be a landmark event in 2024, offering investors an opportunity to invest in a growing NBFC with a solid track record. The strong grey market activity, combined with the company’s financial health and market positioning, makes this IPO worth considering. However, as with any investment, thorough research and risk assessment are essential before diving into the market.
If you’re an existing shareholder of Bajaj Finance or Bajaj Finserv, don’t forget to take advantage of the shareholder quota for better allocation in this much-anticipated IPO.
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