 |
|
The initial public offering (IPO) of Bajaj Housing Finance continued to attract significant interest from investors on the second day of bidding, driven by strong participation from high-net-worth individuals (HNIs), shareholders, and retail investors. The IPO, which commenced on Monday, September 9, had already been oversubscribed more than two times on the first day. Bajaj Housing Finance is offering its shares in a price band of Rs 66-70 apiece, with a minimum application of 214 shares and multiples thereafter. The company aims to raise Rs 6,560 crore through the IPO, comprising a fresh share sale of Rs 3,560 crore and an offer-for-sale (OFS) of up to Rs 3,000 crore by Bajaj Finance.
By 2:30 pm on Tuesday, September 10, investors had bid for 3,51,31,02,110 equity shares, representing a 4.83 times subscription compared to the 72,75,75,756 equity shares offered. The three-day bidding period will conclude on Wednesday, September 11. The allocation for non-institutional investors (NIIs) was oversubscribed 11.43 times, while the portion reserved for retail investors saw a 3.18 times subscription. The employee portion was subscribed about 0.75%, and the shareholder quota was booked 7.32 times. However, the quota allocated to qualified institutional bidders (QIBs) was subscribed 2.40 times at the same time.
The grey market premium of Bajaj Housing Finance has witnessed a sharp increase, despite volatility in the broader markets. Reports indicate that the company is commanding a premium of Rs 65-66 per share in the unofficial market, suggesting a potential listing pop of around 95% for investors. Notably, the grey market premium stood at around Rs 56 on the first day of bidding. Brokerages are generally positive about the IPO, recommending investors to subscribe for the long term. They cite the company's solid parentage, strong market share, growing assets under management (AUM), reasonable cost of funds, and robust growth potential as key reasons for their optimism. However, asset concentration and exposure to the real estate sector are considered key concerns for the company.
Marwadi Financial Services highlighted that Bajaj Housing Finance is set to list at a price-to-book (P/B) ratio of 3.19 times with a market capitalization of Rs 58,297 crore, considering a post-issue book value of Rs 15,793.5 crore. In comparison, peers like LIC Housing, PNB Housing, Can Fin Homes, Aadhar Housing Finance, Aavas Financiers, Aptus Value Housing, and Home First are currently trading at P/B multiples ranging from 1.2 to 4.7 times. Marwadi Financial Services assigned a 'subscribe' rating to the IPO, citing the company's position as the second largest non-deposit-taking housing finance company (HFC) in India based on AUM, its proven track record of strong growth driven by a diversified portfolio, and its reasonable valuation compared to its peers.
Bajaj Housing Finance has allocated shares worth Rs 200 crore for eligible employees, while shares worth Rs 500 crore are reserved for eligible shareholders of Bajaj Finance and Bajaj Finserv. The net offer will be split with 50% allocated to qualified institutional bidders, 15% to NIIs, and 35% to retail investors. Prior to the IPO, Bajaj Housing Finance secured Rs 1,758 crore from 104 anchor investors by allocating them 25,11,42,856 equity shares at Rs 70 apiece. The company reported a net profit of Rs 482.61 crore on revenue of Rs 2,208.73 crore for the quarter ended June 30, 2024. For fiscal year 2023, it achieved a net profit of Rs 1,731.22 crore on revenue of Rs 7,617.71 crore.
Bajaj Housing Finance has emerged as the largest non-deposit-taking HFC in India within seven years of commencing mortgage operations. The company aims to further diversify and strengthen its market presence through a strategic customer focus and comprehensive risk management approach to capitalize on future opportunities arising from increased mortgage penetration, according to Master Capital Services. Its omni-channel sourcing strategy, strong geographic presence, and extensive distribution network enable it to acquire a large customer base. The company plans to optimize borrowing costs by diversifying its borrowing profile and leverage technology and analytics to enhance productivity, reduce expenses, improve customer experience, and manage risks. Master Capital Services also recommends subscribing to the IPO.
Kotak Mahindra Capital Company, BofA Securities India, Axis Capital, Goldman Sachs (India) Securities, SBI Capital Markets, JM Financial, and IIFL Securities are serving as the book running lead managers for the Bajaj Housing Finance IPO, while Kfin Technologies is the registrar. The company's shares are expected to be listed on both BSE and NSE on September 16, Monday.
Source: Bajaj Housing Finance IPO booked 5 times on Day 2 so far; GMP rises sharply