Bajaj Housing Finance IPO: A good listing of diversified NBFC Bajaj Housing Finance Ltd in the stock market can bring a 5 percent gain to the share of its parent company Bajaj Finance Ltd. An analyst from a multinational investment bank and financial services company has made the claim.
They also believe this could lead to the reverting of other companies that finance housing. Bajaj Housing Finance Ltd IPO is set to start on September 9 and end on September 11.
The price range for this is between 66 to 70 rupees per share. The lot size is the equivalent of 214 shares.
According to the analysts, “The gray market premium for Bajaj Housing Finance Ltd share is around Rs 56, which indicates a 50 percent listing premium based on the total valuation.
This can give Bajaj Finance share an additional 5 percent gain from the current level.” On September 4, Bajaj Finance shared is flat at Rs 7300.
The Underperform Rating For The Stock Remains Intact
Despite this upside potential, however, the brokerage has maintained an underperform rating for Bajaj Finance and has a target price of 6,300 rupees per share. This is 14 percent lower than the stock’s closing price on the BSE on September 3.
The lower price target is due to the expectation of a drop in Return on Equity (RoE) for Bajaj Housing Finance Ltd due to equity diluting.
“We estimate that the fresh capital raised through the IPO will result in RoE declining to 12 percent from the current 15 percent,” the firm said.
Additionally, the equators wondered what Bajaj Housing Finance Ltd has the potential to be as huge as the once-prominent HDFC Ltd, which merged with HDFC Bank. Bajaj Housing Finance’s post-IPO valuation is estimated to be 2.6 times its estimated book value for FY26.
The IPO Will Comprise Both New Shares And OFS
As per the Red Herring Prospectus (RHP), the total value of the Bajaj Housing Finance Ltd IPO will be around 6,560 crore rupees. In this regard, new shares worth around 3,560 crore rupees will be issued.
Additionally, it will also be an offer to purchase (OFS) of 3000 crore rupees. 50 % of the proceeds will be reserved for institutional buyers, 35 % for retail investors, and 15 % for non-institutional investors.
When Will Bajaj Housing Finance Be Listed?
Investors from Anchor will have the opportunity to participate in shares in the IPO on the 6th of September. After the issue closes, the allotment can be finalized on September 12.
The shares will trade in the markets of BSE or NSE on 16 September. The Reserve Bank of India has classified Bajaj Housing Finance Ltd as an upper-layer NBFC.
The company’s net profit rose 5 % year-on-year, up to 483 crore rupees this first period of fiscal period 2024-25 (April-June 2024). Net profit in FY 2024 jumped 38 percent to Rs 1,731.22 crore.
Quick Fact
Bajaj Housing Finance
| Company name | Bajaj Housing Finance |
|---|---|
| IPO Date | September 9-11 |
| Price Range | ₹66-₹70 per share |
| Lot Size | 214 shares |
| Gray Market Premium | ₹56 |
| Expected Listing Premium | 50% |
| Possible Gain for Bajaj Finance | 5% |
| Target Price for Bajaj Finance | ₹6300 |
| Rating for Bajaj Finance | Underperform |
| Equity Dilution Impact | ROE is down to 12% from 15% |
| Post-IPO Valuation | 2.6 times estimated book value for FY26 |
| Total IPO Value | ₹6560 crore |
| New Shares Value | ₹3560 crore |
| OFS Value | ₹3000 crore |
| Institutional Investor Allocation | 50% |
| Retail Investor Allocation | 35% |
| Non-Institutional Investor Allocation | 15% |
| Anchor Investor Date | September 6 |
| Allotment Date | September 12 |
| Listing Date | September 16 |
| Classification | Upper-layer NBFC |
| Net Profit Q1 FY25 | ₹483 crore |
| Net Profit FY24 | ₹1731.22 crore |
| Profit Growth FY24 | 38% |
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