The financial world was abuzz on September 16 as Bajaj Housing Finance made a spectacular debut on the stock market. The company’s shares opened at Rs 150, marking a staggering 114% premium over the initial public offering (IPO) price of Rs 70. This impressive start was just the beginning, as the stock quickly hit the upper circuit, climbing to Rs 164.99.
Bajaj Housing Finance IPO: A Record-Breaking IPO
Bajaj Housing Finance’s IPO was nothing short of a phenomenon. The Rs 6,560-crore offering saw overwhelming participation, particularly from institutional investors. During its three-day subscription window, the issue was oversubscribed by nearly 64 times, attracting bids for a whopping 4,627 crore shares against the 72.75 crore shares on offer.
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The IPO consisted of a fresh issue of equity shares worth Rs 3,560 crore and an offer-for-sale (OFS) of equity shares amounting to Rs 3,000 crore by the parent company, Bajaj Finance. This move was partly driven by the need to comply with Reserve Bank of India (RBI) regulations, which mandate that upper-layer non-banking finance companies must be listed on stock exchanges by September 2025.
Market Capitalization and Valuation
Following its stellar debut, Bajaj Housing Finance’s market capitalization soared to over Rs 1.37 lakh crore, according to NSE data. This rapid ascent has placed the company at a price-to-book (P/B) multiple of 6x, significantly higher than its peers in the housing finance sector.
Expert Opinions and Investment Strategies
The blockbuster listing of Bajaj Housing Finance has left many investors who missed out on the IPO wondering about their next move. Experts have weighed in with varying perspectives:
Narendra Solanki from Anand Rathi Shares & Stock Brokers expressed optimism about the company’s fundamentals and outlook, suggesting that its business should continue to grow at a healthy pace. However, he advised that investors considering adding the stock should adopt a long-term perspective.
On the other hand, Rajesh Agarwal from AUM Capital recommended LIC Housing as a better investment option based on valuation metrics.
Chakri Lokapriya, a veteran Dalal Street investor, cautioned against chasing the stock at higher valuations, suggesting that other housing finance companies like PNB Housing and LIC Housing might be better options for those who missed out on the IPO.
Strategies for Different Investor Types
For those lucky enough to have received an allocation in the IPO, opinions are split. Some experts, like Prashanth Tapse of Mehta Equities, recommend conservative investors consider booking profits, while advising long-term investors to hold onto their shares given the optimistic sector outlook.
Shivani Nyati from Swastika Investmart suggested a middle ground, proposing that those who want to hold their positions could set a stop loss at Rs 135 as a risk management strategy.
Deven Choksey of DRChoksey FinServ took a more bullish stance, stating that investors willing to hold the stock for a decade “will be most wealthy.”
Broader Impact on the NBFC Sector
The success of Bajaj Housing Finance’s IPO is expected to have ripple effects across the non-banking financial company (NBFC) sector, particularly in the housing finance space. Krishna Appala from Capitalmind Research suggested that this IPO could lead to a re-rating of private NBFCs in the market, potentially benefiting companies that have shown strong growth but lackluster stock performance in recent years.
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The Bajaj Housing Finance IPO has undoubtedly made waves in the financial markets. While its blockbuster listing has created significant wealth for lucky allottees, it has also raised questions about valuation and future growth prospects. As the dust settles, investors will need to carefully consider their risk appetite, investment horizon, and the broader economic landscape before making decisions about this newly listed financial powerhouse.
