Bajaj Housing Finance IPO: A Detailed Analysis

Bajaj Housing Finance has recently made waves in the Indian stock market by launching its Initial Public Offering (IPO). This significant move by the Bajaj Group-backed company has created a buzz due to the overwhelming response from investors. Scheduled to finalize the share allotment on Thursday, September 12, this IPO has set a record in terms of bids and investor interest. In this article, we will dive deep into the details of the Bajaj Housing Finance IPO, its pricing, subscriptions, and other important aspects.

Introduction to Bajaj Housing Finance

Bajaj Housing Finance is a non-deposit-taking housing finance company (HFC), registered with the National Housing Bank (NHB) since 2015. Established in 2008, this Pune-based company offers mortgage loans, a service they initiated in the financial year of 2018. As part of the renowned Bajaj Group, which has a diversified presence across various sectors, Bajaj Housing Finance has gained credibility in the housing finance sector over the years.

The IPO has brought a lot of attention to this company, with investors showing a high level of interest, signaling confidence in its potential for growth. With the funds raised through this IPO, Bajaj Housing Finance aims to strengthen its operations and market share.

IPO Details: Price, Dates, and Subscriptions

Price Band and Lot Size

The IPO was open for bidding from September 9 to September 11, 2024, with a fixed price band of Rs 66-70 per share. The minimum lot size for investors was set at 214 shares, allowing a range of small to large investors to participate.

IPO Size and Fund Allocation

The IPO aimed to raise Rs 6,560 crore through its primary offering, which included:

• Fresh share sale of Rs 3,560 crore
• Offer for sale (OFS) worth Rs 3,000 crore from Bajaj Finance.

This structure allowed the company to generate funds for both expanding its operations and enabling its parent company to reduce its stake through the offer for sale.

Investor Subscription and Historic Response

The Bajaj Housing Finance IPO received an overwhelming response during the three-day bidding period. The IPO was oversubscribed 63.61 times, making it one of the most subscribed IPOs in Indian history.

Here’s a breakdown of the subscription details:

• Qualified Institutional Buyers (QIBs): Subscribed 209.36 times.
• Non-Institutional Investors: Subscribed 41.51 times.
• Retail Investors: Subscribed 7.04 times.
• Shareholders and Employees: Subscribed 17.53 times and 2.05 times, respectively.

This staggering demand indicates strong market confidence in the company’s growth trajectory. Bajaj Housing Finance became the first Indian IPO to receive bids worth over Rs 3 lakh crore, with a total of 46.28 billion equity shares bid for the issue.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Bajaj Housing Finance saw a sharp rise after record-breaking bidding. As of the last update, the GMP stood at Rs 75 per share, indicating a possible 104% listing gain. This means that those who were allotted shares could see their investment potentially double upon listing.

Key Dates and Allotment Process

Share Allotment

The share allotment for Bajaj Housing Finance is set to be finalized on Thursday, September 12, 2024. Investors who have applied for the IPO will either receive shares or see a refund initiated in case of non-allotment by Friday or weekend.

Listing on Stock Exchanges

The shares are expected to be listed on both BSE and NSE on Monday, September 16, 2024. Investors can expect to see their shares credited to their Demat accounts before the listing date, and the company is expected to debut with a significant listing premium based on the current grey market activity.

How to Check Allotment Status

Investors can check their allotment status through the Bombay Stock Exchange (BSE) website or the KFin Technologies portal. Follow these steps to check the status:

Checking Allotment Status on BSE:

1. Visit the BSE allotment status page: https://www.bseindia.com/investors/appli_check.aspx.
2. Under “Issue Type,” select Equity.
3. Under “Issue Name,” select Bajaj Housing Finance Ltd from the dropdown menu.
4. Enter your Application Number.
5. Input your PAN Card ID.
6. Complete the captcha and hit Submit.

Checking Allotment Status on KFin Technologies Portal:

1. Go to the KFin allotment status page: https://kosmic.kfintech.com/ipostatus.
2. Select the IPO name from the dropdown.
3. Choose between Application Number, Demat Account Number, or PAN ID to proceed.
4. Select ASBA or Non-ASBA based on your application type.
5. Enter the relevant details and hit Submit.

KFin Technologies, the registrar of the issue, is responsible for processing all applications and completing the allotment process.

Company Background and Strengths

As part of the Bajaj Group, Bajaj Housing Finance has a solid foundation in the Indian market. The company has been steadily growing its Assets Under Management (AUM) and has positioned itself as a major player in the housing finance industry.

Strengths

• Strong Parentage: Being backed by Bajaj Group provides Bajaj Housing Finance with significant credibility and financial strength.
• Rising AUM: The company has witnessed consistent growth in its assets under management, demonstrating its robust performance in the housing finance sector.
• Low Cost of Funds: Bajaj Housing Finance benefits from low borrowing costs due to its strong financial standing, which allows it to offer competitive interest rates on its mortgage loans.

Concerns

Despite the strong performance, some risks include:

• Asset Concentration: A significant portion of its portfolio is concentrated in a few key sectors, primarily real estate, which could expose the company to sector-specific risks.
• Exposure to Real Estate: The company’s exposure to the real estate sector, which can be volatile, is another point of concern for potential investors.

Broker Recommendations

Brokerages have largely issued positive recommendations for the IPO, encouraging long-term investment due to the company’s solid growth prospects, low cost of funds, and strong parentage. However, they have also highlighted risks related to asset concentration and the company’s exposure to the real estate sector. Investors are advised to weigh the company’s strengths against these potential risks before making investment decisions.

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Conclusion

The Bajaj Housing Finance IPO has set a benchmark with its record-breaking subscription and investor demand. As the company gears up to list its shares on the stock market, investors are hopeful for substantial listing gains. With its strong parentage, robust financials, and promising growth trajectory, Bajaj Housing Finance stands out as a compelling long-term investment option. However, as with any investment, it is crucial to assess the associated risks before making any decisions.