Bajaj Housing Finance IPO Closes Today: Should You Apply? Check Subscription Status, GMP Today

Bajaj Housing Finance IPO: The initial public offering of Bajaj Housing Finance, which is going to be closed on Wednesday, September 11, has received over nine times subscription so far. The price band of the Rs 6,560-crore much-awaited IPO has been fixed at Rs 66 to Rs 70 per share. Till 10:25 am on the final day of bidding on Wednesday, the IPO received a 9.19 times subscription garnering bids for 6,30,15,15,690 shares as against the 68,60,00,009 shares on offer.

The category for non-institutional investors received 19.87 times subscription, while the portion for retail individual investors (RIIs) got subscribed 5 times. The QIB category was subscribed a 8.75 times subscription.

The IPO was opened for public subscription on September 9. The share allotment of the Bajaj Housing Finance IPO will likely be finalised on September 12, while its shares will be listed on both BSE and NSE on September 16.

A total of 50 per cent of the IPO has been reserved for qualified institutional buyers (QIB), 35 per cent for retail investors, and 15 per cent for high-networth individuals.

Apart from this, Bajaj Housing Finance has also reserved Rs 500 crore worth of shares under shareholder quota. Eligible shareholders of Bajaj Finance Limited and Bajaj Finserv Limited as of the Red Herring Prospectus date, i.e. August 30, 2024, would be eligible to apply for this Offer under the Shareholder’s Reservation Portion. Only bids received at or above the Offer Price will be considered in this category.

Bajaj Housing Finance IPO: GMP Today

According to market observers, unlisted shares of Bajaj Housing Finance Ltd are trading Rs 70 higher in the grey market than its issue price. The Rs 70 grey market premium or GMP means the grey market is expecting a 100 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.

‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.

Bajaj Housing Finance IPO: Analysts’ Recommendations

Giving ‘buy’ recommendation, Brokerage firm Anand Rathi in its IPO note said, “In the near term, a fundraise of Rs 7000 crore in Bajaj Housing Finance Ltd (BHFL) is likely to be a catalyst for Bajaj Finance’s (BAF) re-rating. The standalone entity delivers higher RoE (return on equity) and RoA (return on assets) than Bajaj Housing Finance and commands premium valuations. The recent correction offers an attractive entry point. We reiterate a Buy recommendation. At the CMP, the stock trades at 3.7x standalone FY26e BV(adjusted for subsidiaries).”

Another brokerage InCred Equities also recommended a ‘subscription’ rating to the IPO.

In its note, InCred Equities said, “Although mortgages look to be a pure vanilla product, they have multiple dimensions, especially in an emerging market like India. 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.”

InCred, however, said this is expensive compared to peers like LIC Housing Finance (1.2x), PNB Housing (1.7x), and Can Fin Homes (2.7x), but in line with our expectations, given BHFL’s robust yet diversified AUM growth (+30% CAGR), sturdy asset quality (NPAs less than 1%), and superior technology platform enabling it to remain relevant in a stiff competitive environment.

“At the upper band of Rs 70, the stock will be valued at 3.2 times its trailing June 2024 book value (post dilution and adjusting for rights share allocation),” it said.

Bajaj Housing Finance IPO: More Details

The company collected Rs 1,758 crore from anchor investors on Friday. Among the anchor investors are Government of Singapore, Abu Dhabi Investment Authority, Fidelity, Morgan Stanley, Nomura, Goldman Sachs, JP Morgan India Investment Trust Plc, SBI Life Insurance Company, ICICI Prudential Life Insurance Company, HDFC Mutual Fund (MF), Kotak Mahindra MF, SBI MF, UTI MF and Nippon India MF.

According to a circular uploaded on BSE’s website, the company has allotted 25.11 crore equity shares to 104 funds at Rs 70 apiece, which is also the upper-end of the price band. This aggregates the transaction size to Rs 1,758 crore.

The much awaited Rs 6,560-crore initial share-sale will open for public subscription on September 9 and conclude on September 11.

The price band has been fixed at Rs 66 to Rs 70 per share for the public issue.

The proposed IPO comprises a fresh issue of equity shares of up to Rs 3,560 crore and an offer-for-sale (OFS) of equity shares to the tune of Rs 3,000 crore by parent Bajaj Finance.

The share sale is being conducted to comply with the Reserve Bank of India’s (RBI) regulations, which require upper layer non-banking finance companies to be listed on stock exchanges by September 2025.

Proceeds from the fresh issue will be used to augment the company’s capital base to meet future capital requirements.

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.

It has been identified and categorized as an “upper layer” NBFC by the RBI in India and its comprehensive mortgage products include home loans, loans against property, lease rental discounting and developer financing.

For the entire financial year 2023-24 , the housing lender posted a net profit of Rs 1,731 crore, marking a growth of 38 per cent from Rs 1,258 crore in FY23.

Aadhar Housing Finance and India Shelter Finance are two housing finance companies that have listed on the stock exchanges in recent months.

In June, Bajaj Housing Finance filed preliminary papers with Sebi for a Rs 7,000 crore IPO, comprising fresh shares worth Rs 4,000 crore and an OFS component of Rs 3,000 crore by its parent. The market regulator gave its clearance to the company’s maiden public issue earlier this month.

Kotak Mahindra Capital Company Ltd, BofA Securities India Ltd, SBI Capital Markets Ltd, Goldman Sachs (India) Securities Private Ltd and JM Financial Ltd are the book running lead managers that will manage the company’s public issue.