Bajaj Housing Finance IPO bumper listing could lift Bajaj Finance share price by 5%, says Macquarie

Bajaj Housing Finance IPO: A bumper listing of Bajaj Housing Finance shares could boost its parent company Bajaj Finance share price by up to 5%, according to analysts at Macquarie. Bajaj Housing Finance IPO is set to open for public subscription on September 9 and close on September 11. Bajaj Housing Finance IPO listing date is September 16 and trends in the grey market signal a strong debut of shares.

Bajaj Housing Finance is a 100% subsidiary of Bajaj Finance. Bajaj Housing Finance IPO price band has been set at ₹66 - 70 per share. At the upper end of the price band, the company is valued close to ₹58,000 crore, making it the most valuable housing finance company in India.

Bajaj Finance share price has rallied over 8% in the past one month as against Nifty 50’s nearly 2% gain. At ₹58,000 crore after applying a 20% holding company discount, Bajaj Finance’s share price adequately prices in the optimism surrounding the IPO, according to Macquarie.

At the upper end of the price band, Macquarie analysts said, Bajaj Housing Finance trades at 2.6x FY26E P/BV (price to book value) post-money for a 2.5% ROA profile. They expect ROE to drop to 12% from current 15% due to fresh money raised.

“We believe other housing finance companies could also possibly rerate if Bajaj Housing Finance gets a bumper listing. The current grey market premium seems to be around ₹56. In case Bajaj Housing Finance lists at a ~50% premium, based on sum-of-parts, the Bajaj Finance stock has another 5% implied upside,” the analysts at Macquarie said.

The brokerage firm has an ‘Underperform’ rating on Bajaj Finance shares with a 12-month target price of ₹6,300 apiece. The target implies over 14% downside from Tuesday's closing price.

Meanwhile, at the upper-end of the IPO band of ₹70, Bajaj Housing Finance shares will be valued at ~3.2x its trailing June 2024 book value (post dilution & adjusting for rights share allocation).

This is expensive compared to some of its peers like LIC Housing Finance (~1.2x), PNB Housing Finance (~1.7x) and Can Fin Homes (~2.7x). This premium valuation for Bajaj Housing Finance can be justified given the company’s robust yet diversified AUM (Asset Under Management) growth of 30% CAGR, sturdy asset quality with NPAs less than 1% and superior technology platform.

Bajaj Housing Finance IPO GMP

Bajaj Housing Finance shares are trading at a decent premium in the unlisted market as the sentiment of the diversified NBFC’s IPO has improved. Bajaj Housing Finance IPO GMP today, or grey market premium today, is ₹46 per share. This indicates that Bajaj Housing Finance shares are trading at ₹116 apiece in the grey market, a premium of nearly 66% to the issue price of ₹70 per share.

Bajaj Housing Finance IPO Details

The bidding for Bajaj Housing Finance IPO will commence on Monday, September 9, and will conclude on Wednesday, September 11.

Bajaj Housing Finance IPO is a book-built issue of ₹6,560 crore comprising a combination of fresh issue of equity shares worth ₹3,560 crore and an offer-for-sale (OFS) component of 42.86 crore equity shares aggregating to ₹3,000 crore by promoter Bajaj Finance Ltd.

Kotak Mahindra Capital Company Ltd, BofA Securities India, Axis Capital, Goldman Sachs (India) Securities Pvt Ltd, SBI Capital Markets, JM Financial and IIFL Securities are the book running lead managers of the Bajaj Housing Finance IPO, while Kfin Technologies is the IPO registrar.

At 3:15 pm, Bajaj Finance shares were trading 0.68% lower at ₹7,301.20 apiece on the BSE. 

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