Bajaj Housing Finance Shares Set to List on September 16: A Potential Wealth Doubler?

Bajaj Housing Finance Ltd. (BHFL) shares are scheduled to list on the stock exchanges on Monday, September 16, 2024, and market analysts are buzzing with excitement about its potential to double investors' wealth right on the listing day.

Strong Demand Ahead of Listing

The shares of BHFL are trading at a premium of ₹75.50 in the unlisted market, representing a 108% premium over the issue price of ₹70. The initial public offering (IPO) of the Bajaj Group's housing finance arm has seen immense demand, with a total subscription of ₹3.24 lakh crore against an IPO size of ₹6,560 crore. This translates to an overall subscription rate of nearly 64 times the shares on offer, marking it as one of the most significant bids by value in India's market history.

The high demand was particularly evident among Qualified Institutional Buyers (QIBs), who oversubscribed their portion by 209.36 times, while Non-Institutional Investors (NIIs) oversubscribed by 41.51 times. Retail investors also showed keen interest, indicating strong market sentiment and expectations for substantial listing gains.

Market Optimism for Listing Gains

Analysts are optimistic about the stock's performance on its debut day. Prathamesh Masdekar of StoxBox anticipates a strong debut, with the stock expected to list at a 107% premium above the upper band price. If this occurs, it could potentially double investors' wealth, making it a promising investment opportunity.

While there is excitement over the potential listing gains, Prashanth Tapse of Mehta Equities advises caution. He suggests that investors may consider booking profits if the listing gain exceeds expectations. However, he also recommends that long-term investors hold onto their shares, given the positive sector outlook and the company's strong business model.

Strong Fundamentals and Future Growth Prospects

The company is well-positioned for growth, benefiting from the positive momentum in the housing finance sector. According to analysts, the combination of robust financials, a reputable brand, and a potentially successful listing could make Bajaj Housing Finance a compelling long-term investment.

Shivani Nyati, a market expert, noted, "The combination of strong financials, a reputable brand, and a potentially successful listing makes Bajaj Housing Finance an attractive investment for both short-term gains and long-term growth."

Details of the IPO and Utilization of Funds

Promoted by Bajaj Finance and Bajaj Finserv, Bajaj Housing Finance aimed to raise ₹6,560 crore through its IPO, which included a fresh issue of shares worth ₹3,560 crore and an offer-for-sale (OFS) of ₹3,000 crore. The IPO was priced between ₹66-70 per share.

The proceeds from the IPO will be utilized to strengthen the company's capital base, support future business growth, and comply with the Reserve Bank of India's requirement for "upper layer" Non-Banking Financial Companies (NBFCs) to list within three years of notification, by September 2025.

About Bajaj Housing Finance Ltd.

Founded in 2008, Bajaj Housing Finance is a non-deposit-taking Housing Finance Company (HFC) registered with the National Housing Bank (NHB). It has been offering mortgage loans since the financial year 2018 and is a part of the diversified Bajaj Group, which has interests in various sectors. As of FY24, the company's Assets Under Management (AUM) stood at ₹1,37,370 crore, with a growth rate of 56.2% over FY22-24.

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The housing finance market is projected to grow at a rate of 13-15% over FY24-27, providing ample opportunities for companies like Bajaj Housing Finance to expand and lead the sector.

Reference: CNBC-TV18