Bajaj Housing Finance Ltd., the recently listed housing finance arm of Bajaj Finance Ltd., faced a decline in share price on Monday, October 15, as the one-month lock-in period for shareholders came to an end. This moment marks a significant point for investors, particularly for those who have closely monitored the company's performance since its IPO debut on September 16, 2023.

Upon its listing, Bajaj Housing Finance's shares opened at ₹70 and experienced a staggering 135% increase on the first day, reaching a post-listing high of ₹188. However, since that peak, the stock has retreated to its current level, closing at ₹150 as of the last trading session. The end of the lock-in period is pivotal, as 12.6 crore shares, representing 2% of the company’s outstanding equity, have now become eligible for trading, according to a note from Nuvama Alternative & Quantitative Research.

It’s essential to note that the end of the lock-in period does not guarantee that all eligible shares will flood the market for immediate sale. Instead, it simply allows those shares to be traded. The current decline of 3.6% in Bajaj Housing Finance shares on October 15, bringing the price down to ₹145.65, highlights the impact of this significant event on investor sentiment.

Understanding Current Valuations

At present, Bajaj Housing Finance is valued at 5.5 times the financial year 2026 price-to-book ratio and a striking 44 times the price-to-earnings ratio for the same financial year. Such high valuations imply steep expectations for growth in Assets Under Management (AUM) and earnings moving forward. These metrics indicate a belief in the company's robust future, though the share price fluctuation post-lock-in suggests some investors are recalibrating their expectations.

Looking ahead, the company will face another critical milestone on December 12, when another 12.6 crore shares, equating to an additional 2% of the outstanding equity, will also become eligible for trading. This subsequent lock-in expiration could further influence the share price, depending on market conditions and investor sentiment at that time.

In summary, while Bajaj Housing Finance shares have witnessed a notable rise since listing, the recent drop as the lock-in period ended serves as a reminder of the volatility present in stock markets, especially for newly listed companies. Investors are advised to stay informed on upcoming events and market trends that could impact their investment decisions.

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