Bajaj Housing Finance Limited (BHFL), classified as an Upper-Layer NBFC by the Reserve Bank of India (RBI), operates as a 100% subsidiary of Bajaj Finance Limited, one of the most diversified Non-Banking Financial Companies (NBFCs) in India. Headquartered in Pune, BHFL provides a wide array of financial products to both individuals and corporate entities. These include loans for purchasing or renovating homes and commercial spaces, loans against property for personal or business needs, and working capital financing for business expansion.

Furthermore, BHFL offers financing options to developers for constructing residential and commercial properties, as well as lease rental discounting for developers and high-net-worth individuals (HNIs). With a customer base of over 88.11 million across the country, BHFL is well-positioned in the market to cater to a diverse range of financial requirements.

In September 2024, BHFL is launching an Initial Public Offering (IPO) with a Book Built Issue amounting to ₹6,560 crores. This includes a Fresh Issue of 50.85 lakh shares, worth ₹3,560 crores, and an Offer for Sale of 42.85 lakh shares, totaling ₹3,000 crores. Investors can subscribe to the Bajaj Housing Finance IPO from September 9, 2024, to September 11, 2024.

The price band for the IPO is set at ₹66 to ₹70 per equity share, with a minimum lot size of 214 shares. Retail investors must invest a minimum of ₹14,980, while High-Net-Worth Individuals (HNIs) will need to purchase at least 14 lots (2,996 shares), with a minimum investment of ₹209,720.

The book-running lead managers for the issue are Kotak Mahindra Capital Company Limited, BofA Securities India Limited, Axis Capital Limited, Goldman Sachs (India) Securities Private Limited, SBI Capital Markets Limited, JM Financial Limited, and IIFL Securities Limited. KFin Technologies Limited is the registrar for the issue. Shares of Bajaj Housing Finance are expected to be listed on the BSE and NSE, with a tentative listing date set for Monday, September 16, 2024.

IPO Subscription and Allotment Status

As of 06:08 PM on September 9, 2024, the Bajaj Housing Finance IPO subscription status indicated that the IPO was subscribed 2.02 times on its first day of the subscription period. Investors can track the live subscription status on the BSE or NSE for the latest updates.

The allotment date for the Bajaj Housing Finance IPO is expected to be Thursday, September 12, 2024. Investors can check their Bajaj Housing Finance IPO allotment status on the registrar’s website by following these steps:

Visit the IPO allotment status page.

Select Bajaj Housing Finance Limited IPO from the dropdown list.

Enter your application number, PAN, or DP Client ID.

Submit the details to view your allotment status.

This allows investors to confirm whether they have been allotted shares and proceed accordingly with their next steps.

Grey Market Premium (GMP) Insights

The Grey Market Premium (GMP) for Bajaj Housing Finance IPO is projected to range between ₹25 and ₹28, indicating possible listing gains of 35% to 40%. While GMP provides an early indication of market sentiment, it is important to note that it is unofficial and speculative. Investors should not rely solely on GMP for making investment decisions, as the final listing price is determined based on market dynamics and investor demand.

Financial Performance

Bajaj Housing Finance has shown strong financial growth over the past three years, with significant increases in revenue, EBITDA, and Profit After Tax (PAT). The company’s revenue rose from ₹37,671.3 million in FY22 to ₹56,654.4 million in FY23, and further surged to ₹76,177.1 million in FY24. This represents a growth rate of over 25% year-on-year, reflecting BHFL’s expanding customer base and successful product offerings.

Similarly, EBITDA increased from ₹31,409.3 million in FY22 to ₹49,447.8 million in FY23, and continued to rise to ₹68,935.3 million in FY24. This demonstrates the company’s ability to manage operational costs while maintaining healthy profit margins. The Profit After Tax (PAT) also grew steadily, from ₹7,096.2 million in FY22 to ₹12,578.0 million in FY23, and reached ₹17,312.2 million in FY24.

For the Bajaj Housing Finance IPO, the company is offering shares at a pre-issue EPS of ₹2.6 and a post-issue EPS of ₹2.07. The pre-issue P/E ratio stands at 26.92x, while the post-issue P/E ratio is 33.81x, compared to the industry P/E ratio of 20.0x. While this may seem slightly higher in comparison to peers, the company’s robust financial growth and strong return on assets and equity support the valuation.

The company’s Return on Average Equity (ROAE) for FY24 is 15.2%, indicating that BHFL has been able to efficiently utilize its equity base to generate profits. Overall, these financial metrics suggest that the IPO is fairly priced and offers long-term value for investors.

Objectives of the IPO

The Offer for Sale (OFS) component of the IPO allows the Promoter Selling Shareholder to receive the proceeds after accounting for relevant expenses and taxes. The company will not receive any funds from the OFS, and the proceeds from this portion will not contribute to the company’s net proceeds.

The fresh issue proceeds will be directed toward enhancing the company’s working capital and further expanding its lending capacity, allowing it to meet the growing demand for housing finance and business loans.

Bajaj Housing Finance IPO Review and Recommendation

Bajaj Housing Finance, with its diverse product portfolio and a strong track record, is well-established in the NBFC sector, providing loans for housing, commercial spaces, and business expansion. The company benefits from its association with Bajaj Finance Limited, a recognized and trusted name in the Indian financial market.

BHFL’s consistent financial growth, evidenced by rising revenues, EBITDA, and PAT, demonstrates its ability to capture market share and maintain profitability in a competitive space. While the IPO’s P/E ratio may be slightly higher than the industry average, the company’s strong return on equity and steady growth trajectory justify the valuation.

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