Bajaj Housing Finance Limited (BHFL) has launched its Initial Public Offering (IPO) today, September 9, 2024, which will remain open until September 11, 2024. This IPO is a significant event in the Indian financial market, aiming to raise a total of ₹6,560 crores, comprising a fresh issue of ₹3,560 crores and an offer for sale (OFS) of ₹3,000 crores. The price band for the shares has been set between ₹66 and ₹70, with a face value of ₹10 per share.
Company Overview
Founded in 2015 and registered with the National Housing Bank, Bajaj Housing Finance is a non-deposit-taking housing finance company (HFC). It primarily focuses on providing a range of mortgage products, including home loans, loans against property, lease rental discounting, and developer financing. The company has carved a niche in the housing finance sector, particularly catering to salaried individuals, which constitutes a significant portion of its customer base.
As of March 31, 2024, BHFL reported assets under management (AUM) of approximately ₹913,704 million, reflecting a robust compound annual growth rate (CAGR) of 30.9% from fiscal years 2022 to 2024. The average ticket size for home loans issued by the company stands at ₹4.6 million, with an average loan-to-value ratio of 70.5%.
Financial Performance
Bajaj Housing Finance has demonstrated strong financial performance, with a reported net profit of ₹1,731 crore for the fiscal year 2023-24, a substantial increase of 38% from ₹1,258 crore in the previous fiscal year. The company has maintained a low non-performing asset (NPA) ratio, which is indicative of its credit quality and effective risk management practices. This focus on high-quality borrowers has resulted in over 75% of its home loans being issued to customers with a CIBIL score above 750.
IPO Details
The IPO’s structure allows investors to apply for a minimum of one lot, which consists of 214 shares, amounting to an investment of approximately ₹14,980 at the upper price band. Investors can apply for a maximum of 13 lots, totaling 2,782 shares. The allotment of shares will be finalized on September 12, 2024, with the listing expected to occur on September 16, 2024.
Key Financial Metrics
- Price Band: ₹66 – ₹70 per share
- Lot Size: 214 shares
- Minimum Investment: ₹14,980 (1 lot)
- Maximum Investment: ₹194,740 (13 lots)
- Total Issue Size: ₹6,560 crores (Fresh Issue: ₹3,560 crores + OFS: ₹3,000 crores)
Market Sentiment and Expectations
The market sentiment surrounding the IPO is optimistic, with expectations of significant listing gains. Reports indicate a grey market premium (GMP) of ₹50-51 per share, suggesting a potential listing gain of approximately 70% from the upper end of the price band. Such premiums often reflect investor confidence in the company’s growth prospects and overall market conditions.
Strategic Objectives
The proceeds from the IPO will primarily be utilized to strengthen the company’s capital base, facilitating future business expansion and onward lending. This strategic move aligns with the growing demand for housing finance in India, driven by a significant housing shortage estimated at around 100 million units. The company aims to leverage this opportunity to enhance its market presence and service offerings.
Conclusion
The Bajaj Housing Finance IPO represents a crucial step for the company as it seeks to capitalize on the expanding housing finance market in India. With a solid financial background, a diverse product portfolio, and a focus on high-quality borrowers, BHFL is well-positioned for future growth. Investors will be keenly watching the subscription response and subsequent listing performance as the company embarks on this new chapter in its corporate journey.
