Ahead of Bajaj Housing Finance IPO listing, GMP jumps; here’s what experts say on listing price, valuations

Bajaj Housing Finance IPO: After the announcement of share allotment to the applicants, the Bajaj Housing Finance IPO listing date has been fixed on 16th September 2024, i.e. on Monday next week. After the announcement of the listing date, the grey market has gone further bullish on the initial public offering (IPO). According to stock market observers, Bajaj Housing Finance Limited shares are available at a premium of ₹79 in the grey market today.

However, stock market experts advise fresh investors to remain cautious post-listing as Bajaj Housing Finance's IPO listing price may not justify the company's fundamentals. They said that Bajaj Housing Finance's IPO listing price could be around 145 to ₹150, which is around 110 per cent higher than the upper price range of the public issue. So, the book value of Bajaj Housing Finance share post-listing is expected to be around 6 to 6.50 times, whereas its nearest peer, PNB Housing Finance, has a book value of around 2.

Bajaj Housing Finance IPO GMP today

Market observers said that the Bajaj Housing Finance IPO GMP (Grey Market Premium) today is ₹79, ₹2 higher than Friday's GMP of ₹77. They said that the grey market has remained bullish on the Bajaj Housing Finance IPO despite Friday's discounted close, which augurs well for the Bajaj Housing Finance IPO listing on Monday.

Regarding the grey market sentiments for the Bajaj Housing Finance IPO, market observers said that the grey market signals that the Bajaj Housing Finance IPO listing price would be around ₹149 ( ₹70 + ₹79). So, the grey market is signalling a 110 per cent listing gain for Monday's Bajaj Housing Finance IPO allottees.

Bajaj Housing Finance IPO valuations post-listing

Asked about the valuations of Bajaj Housing Finance shares post-listing, Arun Kejriwal, Founder of Kejriwal Research and Investment Services, said, “Post-money NAV of Bajaj Housing Finance Limited stands in 21 to 22. If the stock delivers multibagger returns as the market buzz signals, the book value of the new Bajaj Group stock will come around 6 to 6.50, more than three times its nearest peer, PNB Housing Finance. So, allottees and fresh investors are advised to remain vigilant and should not become prey in the wake of the strong debut of this new Bajaj Group share.”

On why Bajaj Housing Finance IPO listing may not justify the company's fundamentals, Astha Jain, Senior Research Analyst at HEM Securities, said, "The beyond expected buzz around Bajaj Housing Finance IPO is because of other Bajaj Group shares performance. In the NBFC segment, Bajaj Group shares have delivered stellar returns to its long-term shareholders and allottees, and fresh investors may expect the same from this new Bajaj Group stock, which is listed on the BSE and NSE on Monday. So, Bajaj Housing Finance's IPO listing price may not justify the fundamentals, and its book value is expected to remain higher than its peers. So, I recommend Bajaj Housing Finance IPO allottees to book partial profit and hold the stock long-term, maintaining a 'buy, hold and forget' strategy as it is expected to turn into a portfolio stock for long-term investors.

Bajaj Housing Finance financials

Speaking on the financials of Bajaj Housing Finance Limited, Prathamesh Masdekar, Research Analyst atStoxBox, said, "Bajaj Housing Finance Ltd. is the largest non-deposit-taking HFC promoted by Bajaj Finance Ltd. and has been engaged in mortgage lending since FY18, with an AUM of Rs. 971 bn as of Q1FY25. Further, the company has a strong in-house four-tier collections infrastructure comprising touch-free collection (tele-calling), field collection, legal recovery, and settlement to help them with loan collections. It has also set up a specialized collections team to manage cases where collections are overdue for a certain period and a separate team to focus on resolving cases through SARFAESI (Act). As a result, the collection efficiency improved from 98.4% in FY22 to 99.5% in FY24."

"These credit and risk management policies have helped it to maintain the lowest GNPA and NNPA amongst the industry peers. The company's AUM has grown at a CAGR of 30.9% between FY22 and FY24. This growth trajectory positions the company as the fourth fastest-growing NBFC within India's upper-layer category (as per RBI). The company has demonstrated robust performance by strategically emphasizing direct home loan origination and increasing Average Ticket Size across its product suite. These measures have improved the Opex/Asset ratio in recent years. Additionally, the strategic shift in AUM and product mix has mitigated the adverse effects of rising funding costs on the portfolio spread," the StoxBox expert said.

Disclaimer: The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.