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Bajaj Housing Finance's initial public offering (IPO), which opened for subscription on Monday, has seen strong initial demand, getting fully subscribed on Day 1. This signifies a positive response from investors, indicating confidence in the company's future prospects. The IPO will close on September 11, offering investors a chance to become part of this leading housing finance company.
The IPO has received a total of 2.01 times bids, with non-institutional investors driving the highest demand at 4.35 times the allocated shares. Retail investors contributed 1.5 times subscription, while qualified institutional buyers (QIBs) subscribed 1.07 times their allotted portion. This strong subscription from different investor categories showcases a diverse interest in Bajaj Housing Finance, bolstering the company's appeal.
Bajaj Housing Finance, backed by the renowned Bajaj Group, has garnered significant investor interest. Before the IPO opened, the company successfully raised Rs 1,758 crore from anchor investors, including notable names like JP Morgan, Morgan Stanley, Nomura, and HDFC Mutual Fund. This demonstrates the confidence institutional investors have in the company's financial strength and future growth potential.
The IPO aims to raise approximately Rs 6,560 crore, with Rs 3,560 crore from fresh equity sales and Rs 3,000 crore from an offer for sale (OFS). This capital will be used to strengthen the company's financial base and cater to future business needs, enabling further expansion and growth.
Prior to the IPO launch, Bajaj Housing Finance shares were trading at a significant grey market premium (GMP) of Rs 56, indicating a potential 80% premium over the upper end of the price band. This reflects the high demand and investor optimism surrounding the company's offering. Despite the premium valuations, analysts are generally recommending subscription to the IPO, citing the company's strong parentage, robust market position, consistent financial performance, and growth potential in the housing finance and commercial real estate sectors.
Analysts highlight the company's expertise and vision in the mortgage market, particularly in an emerging market like India. Incred Equities emphasizes Bajaj Housing Finance's ability to explore diverse dimensions within the mortgage space, making the company attractive for mid-to-long-term investments. Similarly, YES Securities forecasts significant value growth over the next 12-15 months, driven by anticipated AUM/Earnings growth and high return on equity (RoE) levels.
Bajaj Housing Finance's key strengths, including growth execution, risk management, and operating efficiencies, further solidify its position as a reliable and promising investment option. The company's strategic focus on individual retail housing loans, complemented by commercial and developer loans, caters to a broad customer base, ranging from homebuyers to large developers.
Bajaj Housing Finance's financial performance highlights its consistent growth trajectory. In the fiscal year 2023-24, the housing lender recorded a 38% year-on-year increase in net profit, reaching Rs 1,731 crore. Net income also witnessed a 34% growth, reaching Rs 7,618 crore. This strong financial performance reflects the company's ability to navigate the market effectively and deliver sustainable growth.
Source: Bajaj Housing Finance IPO gets 2 times over-subscribed on Day 1. Check GMP, other details