The initial public offering (IPO) of Bajaj Housing Finance continued to attract a bumper robust from the investors during the second of the bidding process, thanks to the push from HNI, shareholders and retail investors. The issue, which had kicked off on Monday, September 09, was subscribed more than two times on day one.
The Bajaj Housing Finance is selling its shares in the price band of Rs 66-70 apiece. Investors can apply for a minimum of 214 shares and its multiples thereafter. It is looking to raise Rs 6,560 crore via IPO, which includes a fresh share sale of Rs 3,560 crore, and an offer-for-sale (OFS) of up to Rs 3,000 crore by Bajaj Finance.
According to the data, the investors made bids for 3,51,31,02,110 equity shares, or 4.83 times, compared to the 72,75,75,756 equity shares offered for the subscription by 2.30 pm on Tuesday, September 10. The three-day bidding for the issue will conclude on Wednesday, September 11.
The allocation for non-institutional investors (NIIs) was subscribed 11.43 times, while the portion reserved for retail investors saw a subscription of 3.18 times. Employee portion was booked about 0.75 per cent, while the shareholders quota was booked 7.32 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed 2.40 times as of the same time.
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.
The grey market premium of Bajaj Housing has seen a sharp rise despite the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 65-66 per share in the unofficial market, suggesting a listing pop of about 95 per cent for the investors. However, the premium in the grey market stood around Rs 56 on the first day of the bidding.
Brokerages are mostly positive on the issue suggesting investors to subscribe to it for a long term citing its solid parentage, strong market share, rising AUM, reasonable cost of funds and solid growth potentials. However, asset concentration and exposure real estate is the key concern for the company.
Considering the Book Value of Rs 15,793.5 crore on a post issue basis, Bajaj Housing Finance is set to list at a P/B of 3.19 times with a market cap of Rs 58,297 crore, whereas its peers, such as LIC Housing, PNB Housing, Can Fin Homes, Aadhar Housing Finance, Aavas Financiers, Aptus Value Housing and Home First , are trading at 1.2-4.7 times, said Marwadi Financial Services.
"We assign a 'subscribe' rating to this IPO as the company is second largest HFC in India (in terms of AUM) with a track record of strong growth driven by a diversified portfolio. Also, it is available at reasonable valuation as compared to its peers," it added.
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.
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. It 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 FY23.
Bajaj Housing Finance is the largest non-deposit-taking HFC in India within seven years of commencing mortgage operation. It plans to diversify and strengthen its market presence with strategic customer focus and comprehensive risk management to capitalize on the future opportunity of increased mortgage penetration, said Master Capital Services.
"Its Omni-channel sourcing strategy, strong geographic presence, and distribution reach enable it to acquire a large volume of customers and it plans to optimize its borrowing costs by diversifying its borrowing profile. It intends to leverage technology and analytics to enhance productivity, reduce expenses, improve customer experience, manage risks," it added with a 'subscribe' tag.
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.