Bajaj Housing Finance Limited, a prominent non-deposit-taking Housing Finance Company (HFC) under the Bajaj Group, launched its highly anticipated Initial Public Offering (IPO) on September 9, 2024. As the IPO enters its final day of subscription on September 11, investors are keenly following updates, particularly the Bajaj Housing Finance IPO updates regarding grey market premium (GMP), subscription status, and overall market sentiment.
With a target to raise ₹6,560 crore, this IPO has garnered significant attention from retail investors, institutional buyers, and market analysts alike. In this blog, we provide a detailed breakdown of the key developments surrounding the IPO and offer insights into the grey market trends, subscription data, and expert recommendations.
IPO Overview: Fresh Issue and Offer for Sale
The Bajaj Housing Finance IPO comprises a fresh issue of 50.86 crore shares, aggregating to ₹3,560 crore, alongside an offer for sale (OFS) of 42.86 crore shares, totaling ₹3,000 crore. This brings the total issue size to ₹6,560 crore. The price band for the IPO has been set between ₹66 and ₹70 per share.
The proceeds from the fresh issue will be utilized to strengthen Bajaj Housing Finance’s capital base, enabling the company to expand its lending operations and support future growth.
Day-by-Day Subscription Status: A Strong Response from Investors
The Bajaj Housing Finance IPO witnessed strong demand from the very start. By the end of Day 1, the issue had been subscribed 2.26 times, and by the conclusion of Day 2, it surged to 8.08 times. As of the morning of Day 3 (September 11, 2024), the IPO has been subscribed 9.61 times, reflecting a robust interest among investors.
- Retail investors have subscribed 5.11 times the shares reserved for them.
- Non-institutional investors (NIIs) have shown even stronger interest, with their portion subscribed 21.74 times.
- The qualified institutional buyers (QIBs) portion has been subscribed 8.75 times.
- The employee quota received 1.58 times subscription.
- Other investor categories have seen a subscription rate of 11.94 times.
These subscription figures underline the high demand and confidence in Bajaj Housing Finance’s business model, positioning it as one of the standout IPOs in recent times.
Grey Market Premium (GMP) Insights: 100% Premium Expected
Investors closely track the grey market premium (GMP) to gauge the potential listing price of an IPO. As per the Bajaj Housing Finance IPO updates, the GMP for the stock is holding steady at ₹70 per share as of September 11. This suggests an expected listing price of ₹140, representing a 100% premium over the issue price of ₹70.
The GMP has remained at this level since September 10, up from ₹64 on the opening day of the IPO. This consistent rise in the grey market premium reflects investors’ confidence in the company’s prospects and the belief that the stock will perform well post-listing on the BSE and NSE.
Brokerage Recommendations: Positive Outlook for Bajaj Housing Finance
Several leading brokerages have issued positive recommendations for the Bajaj Housing Finance IPO, highlighting the company’s strong brand presence and solid financial performance.
Motilal Oswal Securities Ltd (MOSL), one of the most reputed brokerages, has given a “subscribe” recommendation. The brokerage emphasized that Bajaj Housing Finance benefits from the strong legacy of the Bajaj brand, known for its trustworthiness and reliability in the retail finance space. Furthermore, the company’s well-structured risk management framework has allowed it to maintain stable asset quality, even during volatile market conditions.
Bajaj Housing Finance has also outlined a leverage ratio of approximately 6x–8x and remains confident in its ability to sustain a healthy net interest margin (NIM) by optimizing borrowing costs. At three times the FY25 price-to-book value (P/BV) on a diluted basis, MOSL considers the IPO attractively priced.
About Bajaj Housing Finance: A Trusted Player in the Mortgage Sector
Founded in 2008, Bajaj Housing Finance is a part of the diversified Bajaj Group and has been registered with the National Housing Bank (NHB) since 2015. The company primarily offers a wide range of financial solutions, including home loans, loans against property (LAP), rent concessions, and developer finance.
Bajaj Housing Finance’s growth trajectory has been impressive since it began offering mortgage loans in FY18. As of March 31, 2024, the company had 308,693 active customers, with home loan customers comprising 81.7% of its total customer base. This extensive customer base and diversified product offerings have cemented Bajaj Housing Finance as a leading player in the Indian housing finance sector.
The company’s commitment to providing tailored financial solutions for both individuals and corporates has helped it maintain a strong market position in the competitive housing finance landscape.
Key Dates to Remember: Allotment and Listing
Investors keen on participating in the Bajaj Housing Finance IPO should note the following important dates:
- IPO Closing Date: September 11, 2024
- Allotment Date: The allotment of shares is expected to be finalized on Thursday, September 12, 2024.
- Listing Date: The tentative listing date for Bajaj Housing Finance shares on the BSE and NSE is Monday, September 16, 2024.
Retail Investors: Application Process and Lot Size
Retail investors can participate in the Bajaj Housing Finance IPO by applying for a minimum lot size of 214 shares. At the upper price band of ₹70, this translates to a minimum investment of ₹14,980. For those looking to invest at the lower price band of ₹66, the investment amount would be ₹14,124.
In terms of allocation, 50% of the total issue is reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and at least 35% is earmarked for retail investors. This distribution ensures that all categories of investors have a fair opportunity to participate in the IPO.
Conclusion: A Promising Opportunity for Investors
With a strong brand backing, solid financials, and a robust market response, the Bajaj Housing Finance IPO updates suggest that this issue is a promising opportunity for investors. The high subscription rates across various investor categories and the rising grey market premium point to significant potential for gains post-listing.
As the IPO enters its final day, investors are advised to carefully assess the market sentiment and broker recommendations, making an informed decision on whether to participate in this high-profile offering.
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