Bajaj Housing Finance IPO: Strong Debut Expected with Premium Pricing

upcoming Bajaj Finance IPO is likely to positively impact its parent company, Bajaj Finance, with a potential share price boost of up to 5%.

The IPO opens for public subscription on September 9 and closes on September 11, with shares expected to list on September 16. The IPO, valued at ₹6,560 crore, includes a fresh issue of equity shares worth ₹3,560 crore and an offer-for-sale (OFS) of 42.86 crore equity shares totalling ₹3,000 crore from the promoter, Bajaj Finance Ltd. Early grey market trends suggest a strong debut.

As a wholly-owned subsidiary of Bajaj Finance, Bajaj Housing Finance has set its IPO price band between ₹66 and ₹70 per share. At the top end of this range, the company’s valuation approaches ₹58,000 crore, making it the most valuable housing finance company in India.

Bajaj Finance and Bajaj Housing Finance IPO Insights

Bajaj Finance’s share price has surged over 8% in the last month, outpacing the Nifty 50’s nearly 2% gain. With a ₹58,000 crore valuation after applying a 20% holding company discount, Bajaj Finance’s share price already reflects the optimism surrounding the upcoming Bajaj Housing Finance IPO.

At the higher end of the IPO price range, Bajaj Housing Finance trades at 2.6 times its estimated FY26 book value (P/BV) with a 2.5% return on assets (ROA). If Bajaj Housing Finance has a strong IPO listing, other housing finance companies might see their stock prices rise as well.

At the top end of the IPO range of ₹70, Bajaj Housing Finance shares will be valued at around 3.2 times its book value as of June 2024, which is higher than some peers like LIC Housing Finance (1.2x), PNB Housing Finance (1.7x), and Can Fin Homes (2.7x). However, this higher valuation is justified by Bajaj Housing Finance’s strong and diverse asset management growth, low non-performing assets (NPAs), and advanced technology platform.

Bajaj Housing Finance IPO Grey Market Premium

Bajaj Housing Finance shares are currently trading at a good premium in the unlisted market, reflecting positive sentiment for the IPO. On September 4, the grey market premium (GMP) for Bajaj Housing Finance shares is ₹46 per share. This means the shares are trading at ₹116 each in the grey market, which is about 66% higher than the IPO issue price of ₹70 per share.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.