Bajaj Housing Finance IPO: Last day rush as investors eye Rs 1 lakh crore subscription—What to expect?

Bajaj Housing Finance Limited’s initial public offering (IPO) is nearing its final hours of bidding, and the excitement is palpable among investors and market watchers alike. The IPO, which aims to raise Rs 6,560 crore, is riding high on substantial demand from retail investors, institutional buyers, and non-institutional investors. The IPO’s outcome could potentially reach the monumental Rs 1 lakh crore subscription mark if current trends continue.

High Demand on Last Day of Bajaj Housing Finance IPO

The IPO of Bajaj Housing Finance Limited has been marked by a robust response from investors across categories. By the end of the second day of bidding, the IPO had been subscribed 7.51 times, with non-institutional investors (NIIs) showing the most substantial interest, having their portion subscribed 16.46 times. Retail investors, too, have been enthusiastic, oversubscribing their allocated portion by 3.84 times. The qualified institutional buyers (QIBs) segment followed closely with 7.46 times subscription.

The impressive numbers reflect a strong demand for shares of Bajaj Housing Finance, driven by the company’s reputation, a diverse portfolio of mortgage products, and its strategic position in the housing finance sector. The price band for the shares is set at Rs 66-70 per share, and the IPO is expected to close today, September 11, 2024.

Rising Grey Market Premium (GMP) Fuels Investor Optimism

The grey market premium (GMP) for Bajaj Housing Finance has been trending positively, suggesting a favorable listing gain for investors. As of the latest reports, the GMP continues to reflect a premium above the IPO price, indicating strong market sentiment. This trend in the grey market is often seen as an indicator of how the stock might perform post-listing on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Institutional Backing from Major Players

Bajaj Housing Finance attracted Rs 1,758 crore from anchor investors ahead of the IPO’s public offering. Prominent names in the list of anchor investors include Abu Dhabi Investment Authority, Fidelity, Morgan Stanley, Nomura, Goldman Sachs, JP Morgan India Investment Trust Plc, Kotak Mahindra Mutual Fund, SBI Mutual Fund, UTI Mutual Fund, Nippon India Mutual Fund, and the Government of Singapore. This strong backing from institutional investors is seen as a major endorsement of the IPO, underscoring confidence in the company’s growth prospects.

Expert Opinions: Strong Market Fundamentals but Caution on Valuation

Market analysts believe Bajaj Housing Finance presents a promising long-term investment opportunity due to its strong fundamentals, including high asset quality and a well-diversified product portfolio. Experts from several brokerage firms have recommended subscribing to the IPO, particularly for those with a long-term investment horizon.

However, some analysts caution about the high valuations, urging investors to consider the price-to-earnings ratio and market conditions. According to some experts, despite the slightly high valuations, the company’s strong presence in the housing finance sector and its AAA-rated debt instruments make it an attractive bet for long-term gains.

IPO Details: Key Points for Investors

The IPO comprises a fresh issue of Rs 3,560 crore and an offer-for-sale of Rs 3,000 crore by Bajaj Finance Limited, the promoter of Bajaj Housing Finance. The funds raised are intended to bolster the capital base to meet future business needs and support the company’s ongoing lending activities. Investors looking to subscribe to the IPO must apply for a minimum of 214 shares and in multiples thereafter.

Is the Rs 1 Lakh Crore Subscription Target Within Reach?

As the clock ticks down on the final day of bidding, all eyes are on whether Bajaj Housing Finance will achieve the unprecedented Rs 1 lakh crore subscription mark. With strong investor interest, favorable GMP trends, and significant institutional backing, the IPO is on track for a solid finish. However, market conditions can be unpredictable, and potential investors should weigh their options carefully, considering both the short-term listing gains and long-term growth potential.