The initial public offering (IPO) of Bajaj Housing Finance opens for bidding on Monday, September 9. The Bajaj Group firm is selling its shares in the range of Rs 66-70 apiece, which can be subscribed until Wednesday, September 11. Investors can apply for a minimum of 214 equity shares and its multiples thereafter.
Bajaj Housing Finance, founded in 2008, is a non-deposit-taking housing finance company (HFC) registered with the National Housing Bank (NHB) since 2015 and has been offering mortgage loans since the financial year 2018. It is part of the Bajaj Group, a diversified group of companies with interests in various sectors.
Bajaj Housing Finance is looking to raise a total of Rs 6,560 crore from its primary stake sale, which includes a fresh share sale of Rs 3,560 crore and an offer-for-sale (OFS) of Rs 3,000 crore from its promoter Bajaj Finance. The net proceeds from the issue shall be utilized to augment capital base to meet future business requirements of the company towards onward lending.
Ahead of its IPO, Bajaj Housing Finance has raised Rs 1,758 crore from anchor 104 investors by allocating them 25,11,42,856 equity shares for Rs 70 apiece. Its anchor book includes names like Govt of Singapore, New World Fund Inc, ADIA, Fidelity, Invesco, HSBC, Morgan Stanley, Nomura, JP Morgan and a host of domestic mutual funds and insurance players.
Bajaj Housing Finance provides customized financial solutions to individuals and corporates for the purchase and renovation of homes and commercial spaces. Its mortgage product range is comprehensive and includes home loans, loan against property, rent concessions, and developer finance.
Bajaj Housing Finance had 308,693 active customers, of which 81.7 per cent were home loan customers, as of March 31, 2024. It has a network of 215 branches in 174 locations across 20 states and three union territories, overseen by six centralized retail loan review centers and seven centralized loan processing centers.
Bajaj Housing Finance has reserved shares worth Rs 200 crore for the eligible employees of the company, while shares worth Rs 500 crore shall be reserved for eligible shareholders of Bajaj Finance and Bajaj Finserv. Of the net offer, 50 per cent shares will be allocated for qualified institutional bidders, while NII and retail investors will get 15 per cent and 35 per cent of the net offer.
Bajaj Housing Finance reported a net profit of Rs 482.61 crore with a revenue of Rs 2,208.73 crore for the three months ended on June 30 2024. Its net profit came in at Rs 1,731.22 crore with a revenue of Rs 7,617.71 crore for the financial year ended on March 31, 2024.
Kotak Mahindra Capital Company, BofA Securities India, Axis Capital, Goldman Sachs (India) Securities, SBI Capital Markets, JM Financial and IIFL Securities are the book running lead managers of the Bajaj Housing Finance IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE likely on September 16, Monday.
InCred Equities Rating: Subscribe BHFL is valued at a premium to most HFC peers which, we believe, is justified given its robust growth, sturdy asset quality & superior tech-enabled platform. Though the margin profile is relatively vulnerable, there is enough headroom to improve operating efficiency which may drive RoE outperformance, said InCred Equities in its IPO note.
"We believe BHFL’s management has the vision and capability to explore the same over the years, which makes the company attractive over the mid- to long-term horizon. We recommend subscription to the IPO," it said.
Swastika Investmart Rating: Subscribe Bajaj Housing Finance benefits from the legacy of the renowned Bajaj Group. The company has demonstrated consistent growth in both revenue and profit, with favorable financial metrics. The IPO's valuation is reasonable, said the IPO note from Swastika Investment.
"There is significant anticipation and demand for the IPO. Given the company's strong heritage, financial performance, and market excitement, we recommend subscribing to the IPO for potential listing gains and long-term value appreciation," it added.
IDBI Capital Rating: Subscribe for long term Bajaj Housing Finance primarily focuses on providing mortgage loans to upper-end individual homebuyers/prime homebuyers as well as large-scale developers in India. Backed by the strong parent, Bajaj Group, the HFC has an extensive distribution network of 215 branches as on June 30, 2024 across 174 locations in 20 states, said IDBI Capital.
It is the largest non-deposit taking HFC in India within 7 years of commencing mortgage operations. It also has the highest salaried customer mix in home loan portfolio amongst large HFCs, and is focused on prime housing with higher average ticket size. The company has the lowest GNPA and NNPA ratios among its large HFC peers in the industry, it added with a 'subscribe' rating.
Nirmal Bang Securities Rating: Subscribe Bajaj Housing Finance is well-positioned as the second-largest HFC in India, with a 31 per cent loan CAGR (FY22-Q1FY25), outpacing its peers. BHFL has delivered stable ROE, in line with peers despite operating in the prime segment which has the highest competition, said Nirmal Bang Securities.
"BHFL possesses the lowest GNPA (0.3 per cent) and NNPA (0.1 per cent) among peers, ensuring excellent asset quality. BHFL is being valued at 3.2 times post the IPO fund raise, in line with its peers. However we believe BHFL deserves premium valuations on the back of its higher AUM growth and superior asset quality. Thus we recommend subscribing to the issue," it added.
Canara Bank Securities Rating: Subscribe for long term BHFL has a strong portfolio in Grade A commercial properties, with lease rental discounting (LRD) and developer finance portfolios showing growth. The company is enhancing productivity through technology like machine learning-based risk management and customer sentiment analysis, said Canara Bank Securities.
"This issue is available at P/BVPS of 3.85 times as on FY24, more than average P/BVPS of peers. Despite this, considering BHFL's strong parentage of Bajaj group, strong market position, consistent financial performance, robust risk management, and growth potential in housing finance and commercial real estate, we recommend to 'subscribe' this issue for long-term gains," it said.
StoxBox Rating: Subscribe "The issue is valued at a P/BV of 3.8 times on the upper price band based on FY24 book value, which is fairly valued. We recommend a Subscribe rating for the issue on the back of a strong credit underwriting process and risk management framework which helps in mitigating adverse effects on asset quality," said StoxBox.
Chola Securities Rating: Subscribe BHF: is the second largest HFC in India with an AUM of Rs 97,071 crore. Salaried employees constitute the highest share of the home loan portfolio. The company is primarily focused on housing loans with higher average ticket size. Present average ticket size for home loans is Rs 46 lakh. It boasts of strong asset quality, said Chola Securities.
"It recorded the second highest loan disbursement by HFCs in India amounting to Rs 44,660 crores for FY24. The IPO appears to be fairly priced. However, we expect the company to command a premium of 25-30 per cent over other private HFC’s owing to its size being 4x of nearest private player and consistent AUM growth run-rate of around 30 per cent," it said with a 'subscribe' tag.
DR Choksey Finserv Rating: Subscribe At the upper end of the price band, the BHFL's price-to-book value multiple stands at 3.2 times for the post-IPO book value of Rs 21.9 per share as of June 30, 2024, which is reasonable compared to its peers. The average price-to-book value for the industry is 3.0 times, said DR Choksey Finserv.
"We are optimistic on BHFL’s outlook due to its substantial brand equity, strategic business expansion plans, extensive geographic coverage, and enhanced technological infrastructure through its omnichannel approach. These factors are expected to improve operational efficiency and maintain favourable credit costs, supported by superior asset quality," it said with a 'subscribe' rating.