India’s initial public offer (IPO) market is buzzing with big players like Ola, FirstCry, Emcure and GoDigit taking the primary market route. Next week, another marquee player from the housing finance segment – Bajaj Housing Finance – is set to launch its public offer.
Given its strong brand name and solid business fundamentals, the IPO of Bajaj Housing Finance has already created a buzz in the market. The housing finance company (HFC) looks to raise ₹6,560 crore through its IPO which is set to open on Monday, September 9.
The IPO is priced in the range of ₹66 to ₹70 per share. Here are the key details of the IPO at a glance:
Bajaj Housing Finance IPO Details
| Date | 9-11 September |
| Price Band | ₹66-70/share |
| Issue Size | ₹6,560 crore |
| OFS Size | ₹3,000 crore |
| Minimum Lot Size | 214 shares |
IPO Objective: The company plans to utilise the funds raised via the fresh issue (₹3,560 crore) to strengthen the capital base to meet future business requirements for further lending.
About Bajaj Housing Finance
Part of the Bajaj Group, founded in 2008, Bajaj Housing Finance is a non-deposit-taking HFC. The company entered the business of offering mortgage loans in 2018. The company provides customised financial solutions for both individuals and businesses, facilitating the purchase and renovation of residential and commercial properties.
It is the second-largest HFC in India, with ₹97,070 crore in assets under management (AUM) as of FY24, after LIC Housing Finance. It is also one of the most diversified HFCs, with its mortgage portfolio spread across home loans, loans against property, rent concessions and developer finance.
| AUM Mix | (%) |
| Housing loan | 58% |
| Loan Against Property | 10% |
| Lease Rental Discounting | 19% |
| Developer Finance | 11% |
| Others | 2% |
Source: Bajaj Housing Finance RHP
Bajaj Finance focuses on low-risk and rapidly growing home loan customers. Salaried individuals account for 88% of its home loan customers. According to CRISIL MI&A, the income of salaried individuals stayed stable despite the economic challenges from the COVID-19 pandemic and rising inflation, which helps reassure lenders about the quality of their loans.
| Players | Customer Mix (%) | Avg Ticket Size (in Lakhs) | |
| Salaried | Self-Employed | ||
| Bajaj Housing Finance Limited | 88% | 12% | 46 |
| Can Fin Homes Limited | 72% | 28% | 25 |
| LIC Housing Finance Limited | 88% | 12% | 29 |
| PNB Housing Finance Limited | 61% | 39% | 29 |
Source: Bajaj Housing Finance RHP
The company registered a healthy growth, upwards of 30% year-on-year (YoY), in sales and profit after tax (PAT) in FY24.
| Parameter | FY 23 | FY 24 | Growth (%) |
| Revenue (₹ in Crore) | 5,665.44 | 7,617.71 | 34.46% |
| PAT (₹ in Crore) | 1,257.80 | 1,731.22 | 37.64% |
Source: Bajaj Housing Finance RHP
Strengths & Risks of Bajaj Housing Finance IPO
Strengths
- Bajaj Housing Finance is a part of the Bajaj Group, which has a long-standing reputation in the Indian market, with listed players like Bajaj Finance, Bajaj Auto, and Bajaj Finserv. The group is well recognised and has a strong brand value, which gives confidence to investors.
- Bajaj Housing Finance is the fastest-growing housing finance company, achieving an annual growth rate of 29.3% between FY20-24. With the housing finance segment witnessing strong growth amid growing urbanisation, rising disposable income and government initiatives on affordable housing, the company can be a key player to capitalise on this trend given its prominent position in the segment.
- The company has the lowest NNPA of 0.10% among its peers, thanks to its defined credit evaluation and risk management practices. This means, the company successfully recovered ₹99.9 for every ₹100 it lent in FY24. Being a financial services company, good loan recovery is essential for its business and financials.
Risks
- Three states, namely Maharashtra, Karnataka, and Telangana account for roughly 70% of the company’s total AUM. Any adverse developments in these regions could significantly impact the business.
- If the company cannot quickly or completely recover the collateral or money owed from defaulted loans, it could negatively impact its business and operations.
- The company is heavily relied on the real estate sector, which is cyclical. If the real estate market experiences a major downturn or faces negative developments, it could adversely impact the business.
Shareholder Category In Bajaj Housing Finance IPO
All IPOs have a quota for retail investors, HNIs and institutional players, but Bajaj Housing Finance IPO also has a special portion reserved for shareholders.
Under the shareholders’ portion, the company has reserved shares up to ₹500 crore. So, if you hold even one share of Bajaj Finance or Bajaj Finserv you can bid for the IPO under this quota. This is because Bajaj Housing Finance is a 100% subsidiary of Bajaj Finance, which in turn is a subsidiary of Bajaj Finserv.
But the catch is only those individual investors or HUFs who held the shares of either of these companies on the date of the filing of the RHP are eligible to apply under this quota.
If, as of August 30, you owned shares of Bajaj Finance or Bajaj Finserv, you are eligible to apply under the shareholder category for the Bajaj Housing Finance IPO.
The bid size in the shareholders’ category is up to ₹2,00,000. However, only bids made at or above the offer price will be considered in this category.
How to Apply For Bajaj Housing Finance IPO
To apply for the Bajaj Housing IPO via INDmoney, follow these steps:
- Download the INDmoney app and create a free account by completing the KYC process.
- Click on the INDstocks tab, followed by IPOs.
- In the 'Explore IPOs' section, find 'Live IPOs’.
- Click 'Apply' to view the key details of the IPO.
- Choose the number of lots you wish to apply for and continue with the application.
- Place your order via UPI. The funds for your IPO application will be held in your bank account until the shares are allocated.
Conclusion
In conclusion, investing in the Bajaj Housing Finance IPO presents both opportunities and risks. By weighing these factors carefully, you can make a more informed decision that aligns with your financial goals and risk tolerance.