Bajaj Housing Finance IPO sets record with Rs 3 lakh crore bids! Massive demand signals explosive market debut

The initial public offering (IPO) of Bajaj Housing Finance Limited has closed with a staggering subscription of over ₹3 lakh crore, highlighting intense investor interest. This high-profile IPO, which opened on September 9, 2024, and closed on September 11, was oversubscribed 63.53 times. Such a significant oversubscription indicates robust demand from all investor categories, setting a new benchmark in the Indian financial market.

Unprecedented Demand Drives Bajaj Housing Finance IPO to New Heights

Bajaj Housing Finance offered its shares in the price band of ₹66 to ₹70, aiming to raise ₹6,560 crore. The IPO consisted of a fresh issue worth ₹3,560 crore and an offer-for-sale (OFS) of up to ₹3,000 crore by its parent company, Bajaj Finance Limited. The overwhelming response saw institutional investors, retail investors, and high-net-worth individuals (HNIs) scrambling to secure a stake in the offering.

The IPO received bids for more than 27.24 billion equity shares against the 72.75 million shares on offer, translating to an oversubscription of 63.53 times. Qualified Institutional Buyers (QIBs) led the demand, subscribing to their reserved portion a phenomenal 110.13 times. Non-institutional investors (NIIs) followed with 34.16 times subscription, while retail investors subscribed 6.13 times to their portion. Shares set aside for company employees and shareholders were subscribed 1.74 times and 15.53 times, respectively.

Surge in Grey Market Premium Signals Strong Market Debut

As the Bajaj Housing Finance IPO concluded, the Grey Market Premium (GMP) for the stock surged significantly, reflecting bullish market sentiment. The GMP increased sharply from ₹56 per share at the beginning of the bidding process to ₹70 by the final day, suggesting potential listing gains of up to 100% for the investors. Market analysts believe that such a rise in GMP, despite broader market volatility, underscores strong investor confidence in Bajaj Housing Finance’s growth prospects.

Expert Opinions and Future Outlook of Bajaj Housing Finance

Market experts have weighed in on Bajaj Housing Finance’s prospects, with many suggesting the company is well-positioned for future growth. Analysts have pointed to the company’s strong parentage under Bajaj Finance, substantial market share in the housing finance sector, and rapid growth since launching its mortgage operations in 2018. The company’s strategic focus on prime homebuyers and its extensive distribution network across 174 locations in 20 states further solidify its standing as a leading non-deposit-taking housing finance company in India.

Experts from IDBI Capital noted that Bajaj Housing Finance is the largest non-deposit-taking housing finance company in India within seven years of commencing mortgage operations. They also highlighted that the company has the highest salaried customer mix in its home loan portfolio among large HFCs, which could help it maintain a higher credit quality and stable growth trajectory. The experts have recommended a ‘subscribe’ rating for the IPO, citing the reasonable price-to-book value ratio of 3.2 times as of June 2024.

Key Takeaways and Investor Sentiment

The success of Bajaj Housing Finance’s IPO indicates robust investor confidence in the company’s ability to navigate the competitive landscape of India’s housing finance sector. The proceeds from the IPO will be used to strengthen the company’s capital base, meeting future capital requirements and enhancing its competitive edge. The IPO also aligns with Bajaj Finance’s strategic plan to comply with Reserve Bank of India (RBI) regulations requiring the listing of upper-layer non-banking financial companies (NBFCs) by September 2025.

Investors are closely watching the stock’s listing on the stock exchanges, given the significant oversubscription and strong grey market performance. Analysts remain optimistic but advise caution due to the company’s high asset concentration and substantial exposure to the real estate sector, which could pose risks in a volatile economic environment.