The initial public offering (IPO) of Bajaj Housing Finance continued to attract a bumper response from the investors during the second of the bidding process, as the institutional investors joined the party. The issue was subscribed more than two times on day one and ended day two with more than 8 times subscription.
Pune-based 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 27,24,10,06,094 equity shares, or 37.44 times, compared to the 72,75,75,756 equity shares offered for the subscription by 2.10 pm on Wednesday, September 11. The three-day bidding for the issue, which kicked-off on Monday, September 9, concludes today.
The allocation for qualified institutional bidders (QIBs) was subscribed 110.13 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 34.16 times. Retail portion was booked 6.13 times, while the shareholders quota was booked 15.53 times. However, the quota set aside for employees was subscribed 1.74 times as of the same time.
The IPO of Bajaj Housing Finance has been able to attract bids for more than Rs 1.90 lakh crore, for the issue net of anchor investors, whose allocation has already been finalized. On an individual basis, QIBs made bids for more than 1.37 lakh crore at the given 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 70 per share in the unofficial market, suggesting a listing pop of about 100 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.
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.
"The company 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. At the upper price band, IPO is priced at P/BV of 3.2 times based on June 2024," it said with a 'subscribe' rating.
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 (BHFL) is the second-largest housing finance company in India, with an AUM of Rs 97,071 crore. It boasts the lowest gross non-performing asset (GNPA) ratio of 0.28 per cent and net non-performing asset (NNPA) ratio of 0.11 per cent among major housing finance companies, said GEPL Capital.
"It offers a wide range of financial solutions for both retail and commercial clients. Its omni-channel strategy, extensive geographic presence, and broad distribution network help it attract a large number of customers annually. BHFL is well-positioned to benefit from this growth," it said with a 'subscribe' rating.
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.