Bajaj Housing Finance has made waves in the stock market with an IPO that investors are sure to remember for a long time. Listing at a staggering 114% premium over its IPO price – the stock opened at ₹150 on both the BSE and NSE against an issue price of ₹70, signalling strong investor confidence in the company’s future prospects.
If you’re one of the fortunate few who participated, you’re probably feeling pretty good about your decision.
Highlights
| Category | Highlights |
|---|---|
| Issue Price | Rs. 70 per share |
| Market Capitalisation | Rs 58,297 Crore |
| Grey Market Premium (GMP) | Rs 84 (indicating a premium of nearly 120% above the issue price) |
| Subscription Total | Rs 3.23 Lakh Crore |
| Profit per Lot | Rs 17,120 |
| Listing Price | Rs. 150 per share (114% premium) |
| Closing Price | Rs 164.99 (135% premium) |
| IPO Value | Rs 6,560 Crore |
| Subscription Total | Rs 3.23 Lakh Crore |
| Profit per Lot | Rs 17,120 |
Unprecedented Investor Enthusiasm
The ₹6,560 crore IPO, the largest of the year so far, was met with overwhelming demand, being subscribed nearly 67 times over. This broke all previous records, including that of Tata Technologies, with bids exceeding ₹3.2 lakh crore.
The Qualified Institutional Buyers (QIBs) category led the charge, subscribing 209.36 times, followed by Non-Institutional Investors (NIIs) at 41.51 times, and Retail Individual Investors (RIIs) at 7.04 times.
Prior to listing, Bajaj Housing Finance’s shares were trading at a grey market premium (GMP) of 120%, indicating strong expectations for the stock’s performance. The actual listing surpassed these expectations, providing substantial listing gains to investors.
A Strong Business Backed by a Stronger Brand
- Assets Under Management (AUM) of ₹97,100 Crore: As of the first quarter of FY25, Bajaj Housing Finance reported an AUM of ₹97,100 crore. AUM represents the total value of loans and investments managed by the company, indicating the scale of its operations. This positions the company as the largest non-deposit-taking housing finance company in India.
- 31% Growth in AUM from FY22 to FY24: Between FY22 and FY24, the company’s AUM grew by 31%, showcasing rapid expansion in its lending activities. This growth reflects the company’s ability to attract more customers and increase its market share.
- Profit Surge of 56% Over the Same Period: Profits surged by an impressive 56% from FY22 to FY24. In FY24 alone, the company posted a net profit of ₹1,731 crore, a 38% increase from the previous year’s ₹1,258 crore. This indicates not just growth in business volume but also improved operational efficiency.
- Revenue Growth of 34% in FY24: Revenue climbed by 34% to ₹7,618 crore in FY24. Increased revenue signifies higher income from lending activities, which can be reinvested for future growth.
Maintaining Exceptional Asset Quality
- Gross Non-Performing Assets (GNPA) Ratio at 0.28%: GNPA ratio represents the percentage of loans where borrowers have defaulted on repayments. A low GNPA ratio of 0.28% indicates that only a tiny fraction of loans are at risk, showcasing effective credit assessment and risk management.
- Net Non-Performing Assets (NNPA) Ratio at 0.11%: After accounting for provisions (funds set aside to cover potential losses from bad loans), the NNPA ratio provides a clearer picture of actual risk. An NNPA of 0.11% is exceptionally low, highlighting the company’s prudent lending practices.
- High-Quality Loan Portfolio: Approximately 75.5% of the home loan AUM comes from customers with a CIBIL score above 750. The CIBIL score, ranging from 300 to 900, assesses a borrower’s creditworthiness—the higher the score, the better. By focusing on lending to creditworthy customers, Bajaj Housing Finance minimises the likelihood of defaults, contributing to its strong asset quality.
So, what’s driving this success? It’s not just the brand (though being part of the Bajaj family certainly doesn’t hurt). Bajaj Housing Finance has carved out a niche for itself with a diverse range of mortgage products, including home loans, loans against property, lease rental discounting, and developer financing. Whether you’re a first-time homebuyer or a large-scale developer, Bajaj Housing Finance has something to offer.
| Metrics | FY 2023 | FY 2024 | Growth Rate |
|---|---|---|---|
| Assets Under Management (AUM) | – | ₹97,100 crore | 31% increase (FY22-FY24) |
| Net Profit | ₹1,258 crore | ₹1,731 crore | 56% increase (FY22-FY24) |
| Net Profit (Year-over-Year Growth) | – | – | 38% increase (FY23-FY24) |
| Revenue | – | ₹7,618 crore | 34% increase (FY24 over FY23) |
| Gross NPA Ratio | – | 0.28% | – |
| Net NPA Ratio | – | 0.11% | – |
Why Investors Are So Bullish
Experts are already singing the company’s praises. For those looking at long-term growth, holding onto Bajaj Housing Finance shares could be a smart move. With its aggressive growth plans, the company is anticipating a year-on-year AUM growth of 30-35%, which is double the industry average of 13-14%.
That kind of growth doesn’t happen by accident—it’s backed by a strong business model, solid risk management practices, and a growing demand for housing finance across India.
Use of IPO Proceeds and Regulatory Compliance
The company plans to utilise the net proceeds from the fresh issue of shares. It amounted to ₹3,560 crore, to augment its capital base and meet future business needs related to onward lending. The IPO also included an Offer for Sale (OFS) component of ₹3,000 crore by parent company Bajaj Finance.
The share sale was executed to comply with RBI regulations, which mandate upper-layer NBFCs to be listed on stock exchanges by September 2025. Bajaj Housing Finance’s successful listing not only fulfils this regulatory requirement but also enhances its visibility and access to capital markets.
Analysts Say Patience Pays Off for Bajaj Housing Finance IPO Investors
- Heavily Oversubscribed IPO:
- The IPO was oversubscribed 63.61 times, indicating strong investor confidence and demand.
- Record-breaking bids worth ₹3.2 lakh crore flowed in, showcasing unprecedented market interest.
- Expected Strong Listing Performance:
- Unofficial grey market premiums suggest the stock could list at 110% over its issue price of ₹70.
- A strong debut may lead to immediate gains, but holding long-term could yield even better returns.
- Robust Growth Prospects:
- Analysts anticipate the company’s Assets Under Management (AUM) to double in the next 3-4 years.
- Expected growth rates of 20-25% make it a promising candidate for long-term investment.
- Strong Fundamentals and Parentage:
- Backed by a reputable parent company with a history of prudent lending practices.
- Solid business model and effective risk management enhance its growth potential.
- Potential Sector Re-Rating:
- The successful IPO might lead to a re-rating of private Non-Banking Financial Companies (NBFCs) in the housing finance sector.
- Could shift investor focus to other undervalued companies with strong fundamentals.
- Institutional Demand:
- Anticipated strong demand from institutional investors post-listing may drive the stock price higher.
- Holding long-term allows individual investors to benefit from sustained institutional interest.
- Market Leadership Potential:
- Possibility of becoming a market leader due to aggressive growth strategies.
- Could outperform peers in the housing finance sector over time.
- Favourable Industry Trends:
- Growing demand for housing finance in India due to urbanisation and government initiatives.
- Sector expected to experience sustained growth, benefiting companies like Bajaj Housing Finance.
- Avoiding Short-Term Overvaluation Concerns:
- While immediate post-listing valuations might seem high, long-term holding can mitigate this.
- Future earnings growth could justify the higher price-to-book (P/B) ratios over time.
What to Do If You Missed the Bajaj Housing Finance IPO?
If you didn’t manage to grab a slice of the Bajaj Housing Finance IPO, don’t panic. It’s easy to fall into the trap of making impulsive decisions driven by FOMO (fear of missing out), but seasoned investors know the importance of avoiding hasty choices.
Take a step back and evaluate the situation with a clear head. There are always alternatives in the market—other players in the housing finance sector could offer solid value and growth potential, often at more reasonable valuations.
If you’re still keen on Bajaj Housing Finance, it’s worth adopting a long-term perspective. The stock’s recent surge doesn’t mean you’ve missed the boat; it might just mean waiting for the right entry point. Stay informed, keep an eye on market movements, and be patient. A well-timed decision based on careful analysis always beats a rushed move driven by emotion.
Conclusion
Bajaj Housing Finance’s market debut underscores strong investor confidence in India’s housing finance sector and the company’s robust growth trajectory. With solid financial performance, strategic positioning, and the backing of the reputable Bajaj brand, the company is poised to capitalise on future opportunities.
For individuals looking to navigate this dynamic market, platforms like Credit Dharma offer hassle free home loan options and expert guidance on housing finance and investment opportunities. Staying informed through trusted resources can empower investors and homebuyers to make well-informed decisions and capitalise on the growth in the housing finance sector.
Frequently Asked Questions
The IPO issue price for Bajaj Housing Finance shares was set at ₹70 per share.
Financial experts suggest exercising caution due to the high valuations post-listing. Investors are advised to conduct thorough analysis, consider long-term investment horizons, and possibly wait for a more suitable entry point.
Bajaj Housing Finance shares listed at ₹150 per share on both the BSE and NSE, representing a 114% premium over the IPO issue price.
The shares surged by 114% on their market debut, listing at ₹150 compared to the IPO price of ₹70.
The shares hit the upper circuit and closed at ₹165 per share on the first day of trading.
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