1. Blog
  2. News
  3. Bajaj Housing Finance IPO: What It Means for Allottees and Late Entrants

Bajaj Housing Finance IPO: What It Means for Allottees and Late Entrants

Bajaj Housing Finance IPO: What It Means for Allottees and Late Entrants
0
(0)

Bajaj Housing Finance’s Rs 6,560 crore IPO (September 9-11, 2024) made a bumper debut on BSE and NSE on 16 September 2024, with a 114% premium (at Rs 150) to its issue price of Rs 66-70 per share. The subscription exceeded ₹3 lakh crore, reflecting strong investor interest and a solid foothold in the rapidly growing housing finance industry. 

Following its listing, Bajaj Housing Finance’s shares surged to ₹165, marking a 10% rise from their debut price. However, the performance has put pressure on its peers, with LIC Housing Finance, PNB Housing Finance, and Can Fin Homes experiencing declines of up to 6.3%. It has affected not just its peers but also the Bajaj Group, with Bajaj Finserv and Bajaj Finance share prices falling by 3% and 3.3%, respectively. 

Implications for the Allottees of Bajaj Housing Finance IPO

The impact of the biggest IPO debut in 2024 goes beyond these. It has left Dalal Street’s investors with a crucial question:

Should they cash in on their profits now or hold on to their shares for potential long-term benefits? 

Experts believe that post-listing, some investors may opt to realize their gains, while others may decide to maintain their positions, given the company’s well-positioned business model and the sector’s favorable outlook. [Source: Livemint]

Analysts believe the positive streak will continue for the mid to long term for those who have bagged the allotment. In independent market analyst Ambareesh Baliga’s words, “We have seen an IPO coming from Bajaj Group after a really long time. Bajaj Housing is a long-term bet and investors may hold it for some time as positive momentum may continue in the stock as long as the overall market sentiment remains buoyant.” [Source: Business Standard]

Implications for Shareholders

The Bajaj Housing Finance IPO has implications for the company’s shareholding structure, including potential dilution of existing shareholders’ stakes due to new investors entering the scene. The listing may also lead to a shift in ownership, potentially altering decision-making dynamics. 

Financially, this IPO increased liquidity for existing shareholders, allowing them to buy or sell shares easily. Bajaj Housing Finance may also consider distributing dividends to shareholders as a publicly traded company. In terms of valuation and share price, the company may experience short-term volatility due to market sentiment and speculation. However, existing shareholders can anticipate potential long-term growth as the company expands its operations and market reach.

Valuation Concerns Amidst Strong Fundamentals

Analysts say Bajaj Housing Finance’s IPO price reflected a fair value with a price-to-book (P/B) ratio of approximately 2.8 times. However, its strong parentage, prudent lending history, and 20-25% growth expectations have led to a premium listing, limiting investor returns.[Source: Economic Times]

Compared to peers, Bajaj Housing Finance has the highest valuation, with a 25% premium over the next closest company, Home First Finance. Institutional demand may temporarily boost the stock post-listing, but meaningful gains may require patience.

Analysts advise against chasing the stock at high prices on listing day. Instead, they recommend holding long-term, anticipating a doubling of assets under management (AUM) over 3-4 years.

Narendra Solanki of Anand Rathi and Krishna Appala of Capitalmind caution that investors should prioritize long-term gains over short-term profits.

Experts Weigh in the Opportunities & Key Considerations for Non-Allotees

Even if investors miss the IPO, they still have opportunities to invest in the shares. Since the shares are now listed on the stock exchanges, they can purchase them at the prevailing market price. While the initial gains may not be as substantial as those enjoyed by the allottees, there is still potential for long-term appreciation.

Veteran investor Chakri Lokapriya advises caution when considering Bajaj Housing Finance, citing the commoditized nature of the housing finance industry. “Considering the similarity in loan rates and service quality, I’d opt for other housing companies like PNB Housing or LIC Housing,” he said. In contrast, seasoned financial analyst Prashanth Tapse states, “Housing will continue to perform well over the next 3-4 years, and Bajaj Housing is poised to lead the sector.” 

Considering historical data, Fund Manager Sonam Srivastava recommends a patient approach to IPO investing since initial IPO surges are often hype-driven. As the market stabilizes, prices adjust to reflect a company’s fundamentals.

As the hype surrounding the listing settles, short-term price fluctuations reduce, and investors can reassess the company’s valuation. This allows for more informed decision-making, thorough due diligence on financials and business models, and avoidance of overvaluation.

The IPO listing of Bajaj Housing Finance may present opportunities and challenges for existing shareholders. To make well-informed investment decisions, investors should diligently monitor the company’s performance and stay abreast of market trends.

FAQ

  1. What was the IPO subscription and listing performance of Bajaj Housing Finance?

    Bajaj Housing Finance’s Rs 6,560 crore IPO saw a subscription of over ₹3 lakh crore. It listed on BSE and NSE with a 114% premium at Rs 150, rising to Rs 165 on debut.

  2. How will the IPO impact existing shareholders?

    The IPO may lead to dilution of existing shareholders’ stakes, changes in ownership, and decision-making dynamics. However, it also increases liquidity and potential dividend payments.

  3. What are the implications for existing shareholders?

    The IPO may lead to a dilution of existing shareholders’ stakes, potential shifts in ownership, and increased liquidity. The company may also consider distributing dividends and could experience short-term volatility in share price.

  4. What should non-allottees consider when investing in Bajaj Housing Finance now?

    While the initial gains may be missed, there is still potential for long-term appreciation. However, investors should carefully evaluate the company’s valuation, consider the competitive nature of the housing finance industry, and maintain a long-term perspective.

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

c732900095edf69e76e98850a959ebe3?s=150&d=mp&r=g
+ posts

I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.

Announcing Stock of the Month!

Grab this opportunity now!

Gandhar Oil Refinery (India) Ltd. IPO – Subscription Status,

Allotment & Other Key Dates

Registered Users

10 lac+

Google Rating

4.6

Related Articles

What’s trending

Read our latest blogs

Who we are

SEBI registered investment advisory services

Media, Award & Accolades

Stay updated with our winning journey

Video Gallery

Watch our exclusively curated financial videos

Performance

Know the journey of stocks

Newsletters

Stay on top of the stock market

Contact us

Stay in touch

5 in 5 Strategy

A portfolio of 20-25 potential high-return stocks

MPO

1 high-growth stock recommendation/ month, that is trading below its intrinsic value

Combo

A combined solution of 5-in-5 wealth creation strategy & mispriced opportunities

Dhanwaan

Manage your portfolio with dhanwaan

Informed InvestoRR

A step by step guide to sharpen your investing skills

EPW Coming soon

A concentrated portfolio of 12-18 high-growth & emerging theme stocks

Pricing

Choose from our range of pricing packages