Bajaj Housing Finance IPO Opening on September 9: Everything You Need to Know
Bajaj Housing Finance Limited (BHFL) is set to launch its initial public offering (IPO) on September 9, 2024, marking a significant event in the Indian financial sector. This IPO, the largest of 2024, aims to raise ₹6,560 crore and will be available for bidding until September 11.
Also Read-How to Invest in IPO Online: IPO में निवेश कैसे करें: सरल गाइड और स्टेप्स
Key Details of the Bajaj Housing Finance IPO.
The Bajaj Housing Finance IPO consists of a fresh issue of equity shares worth ₹3,560 crore and an offer for sale (OFS) of ₹3,000 crore by the promoter, Bajaj Finance. The price band for the IPO has been set at ₹66-70 per equity share. Investors can bid for a minimum of 214 equity shares and in multiples thereof.
Bajaj Housing Finance IPO.
| IPO Detail | Information |
|---|---|
| Opening Date | September 9, 2024 |
| Closing Date | September 11, 2024 |
| Price Band | ₹66-70 per share |
| Lot Size | 214 shares |
| Fresh Issue | ₹3,560 crore |
| Offer for Sale | ₹3,000 crore |
| Total Issue Size | ₹6,560 crore |
| Listing Date | September 16, 2024 (Expected) |
About Bajaj Housing Finance.
Bajaj Housing Finance is a non-deposit taking housing finance company registered with the National Housing Bank since September 2015. It offers financial solutions for purchasing and renovating residential and commercial properties. The company has shown impressive growth, becoming the second-largest housing finance company in India in terms of Assets Under Management (AUM).
Financial Performance.
Bajaj Housing Finance has demonstrated strong financial performance in recent years:
- Net profit grew by 37.6% to ₹1,731.2 crore in FY24 from ₹1,257.8 crore in FY23
- Revenue from operations increased by 34.5% to ₹7,617.3 crore in FY24
- Assets under management (AUM) rose to ₹91,370.4 crore in FY24, a 32% increase from ₹69,227.9 crore in FY23
| Financial Metric | FY22 | FY23 | FY24 | CAGR |
|---|---|---|---|---|
| Net Profit | ₹913.4 cr | ₹1,257.8 cr | ₹1,731.2 cr | 37.6% |
| Revenue | ₹4,202.1 cr | ₹5,663.4 cr | ₹7,617.3 cr | 34.5% |
| AUM | ₹53,321.7 cr | ₹69,227.9 cr | ₹91,370.4 cr | 30.9% |
Competitive Landscape.
Bajaj Housing Finance faces competition from other housing finance players, NBFCs, and scheduled commercial banks. Its main competitors include LIC Housing Finance Ltd, PNB Housing Finance Ltd, Can Fin Homes Ltd, Aadhar Housing Finance, Aavas Financiers, Home First Finance, and Aptus Value Housing Finance.
Strengths and Risks.
Strengths:
- Strong brand recognition of the “Bajaj” name
- Second-largest housing finance firm in India by AUM
- Track record of strong growth
- Diversified portfolio
- Strategic presence with an omnichannel sourcing strategy
- Customer-focused digitization initiatives
Risks:
- Liquidity and funding risks
- Interest rate risk
- Credit risk
- Technology risks
- Operational risks
Purpose of the IPO.
The primary objective of this IPO is to comply with an RBI mandate that requires top NBFCs to list on stock markets within three years of receiving “upper layer” status. Additionally, the company plans to use the proceeds from the fresh issue to augment its capital base and meet future business requirements for onward lending.
Gray Market Premium.
Ahead of its IPO, Bajaj Housing Finance shares are trading at a premium of ₹55 in the gray market, representing a nearly 79% premium over the upper end of the IPO price band. This strong gray market premium suggests positive investor sentiment and expectations of a successful listing.
Reservation for Shareholders and Employees.
The IPO includes a reservation of ₹500 crore for shareholders of Bajaj Finance and Bajaj Finserv, and ₹200 crore for eligible employees. Shareholders who own at least 1 share in Bajaj Finance or Bajaj Finserv as of the record date (August 31, 2024) are eligible to apply under this quota.
Market Expectations and Grey Market Premium.
The IPO has generated significant interest in the market. Shares of Bajaj Housing Finance are currently trading at a premium of ₹55 in the grey market, up from ₹42 prior to the RHP filing. This represents a significant increase of approximately 79% above the upper price band of the IPO.
Expert Opinions.
Analysts at Macquarie believe that a strong listing of Bajaj Housing Finance could drive a 5% upside for its parent company, Bajaj Finance. However, they maintain an ‘underperform’ rating for Bajaj Finance, citing expectations of a decline in return on equity (RoE) due to equity dilution in Bajaj Housing Finance.
Conclusion.
The Bajaj Housing Finance IPO represents a significant opportunity for investors to participate in the growth of one of India’s leading housing finance companies. With its strong brand, impressive growth trajectory, and strategic market position, BHFL is well-positioned to capitalize on the growing demand for housing finance in India. However, as with any investment, potential investors should carefully consider the risks and conduct thorough research before making a decision.
FAQs.
- When does the Bajaj Housing Finance IPO open?
The IPO opens on September 9, 2024, and closes on September 11, 2024. - What is the price band for the IPO?
The price band is set at ₹66-70 per equity share. - How many shares can I apply for in the IPO?
The minimum bid is for 214 equity shares and in multiples thereof. - Is there a reservation for existing Bajaj Finance shareholders?
Yes, there’s a reservation of ₹500 crore for shareholders of Bajaj Finance and Bajaj Finserv. - When is the expected listing date for Bajaj Housing Finance shares?
The expected listing date is September 16, 2024. - What will the company use the IPO proceeds for?
The proceeds will be used to augment the company’s capital base and meet future business requirements for onward lending. - Who are the book running lead managers for this IPO?
The lead managers include Kotak Mahindra Capital Company, BofA Securities India, Axis Capital, Goldman Sachs (India) Securities, SBI Capital Markets, JM Financial, and IIFL Securities.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. The information provided is based on current market data and expert opinions, which may change over time. Investing in IPOs carries risks, and readers should conduct their own research and consult with financial advisors before making investment decisions. The author and publisher are not responsible for any financial losses incurred based on the information provided in this article.
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C.K. Gupta
Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.
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