| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 66 to ₹ 70 | 214 | 09th Sep, 2024 – 11th Sep, 2024 | ₹6,560.00 Cr |
About Bajaj Housing Finance Ltd IPO
Bajaj Housing Finance is a non-deposit-taking Housing Finance Company (HFC), registered with the National Housing Bank (NHB) since 2015, and engaged in mortgage lending since FY18. The company offers a wide range of financial solutions tailored to individuals and corporate entities for the purchase and renovation of homes and commercial spaces. Its mortgage product suite is comprehensive and comprises (i) home loans, (ii) loans against property (LAP), (iii) lease rental discounting, and (iv) developer financing. Furthermore, the company primarily emphasizes individual retail housing loans, complemented by a diversified collection of lease rental discounting and developer loans. Consequently, the company’s financial products cater to every customer segment, from individual homebuyers to large-scale developers. Bajaj Housing Finance’s strategic focus is on low-risk and fast-growing home loan customers. As of March 31, 2024, home loans contributed 57.8% of AUM, of which 87.5% pertained to salaried customers, 4.3% were self-employed professional customers and 8.2% self-employed non-professional customers. As of March 31, 2024, assets under management (AUM) were Rs. 913.7 bn, reflecting a CAGR of 30.9% between FY22 and FY24. Further, as of June 30, 2024, the average ticket size of home loans was Rs. 4.6 mn, with an average loan-to-value ratio of 69.3% as of June 30, 2024, and 75.5% of home loan AUM were from customers with a CIBIL score above 750. Further, the company’s LAP, developer finance loans for residential as well as commercial construction and lease rental discounting against commercial properties comprised 10.0%, 11.2%, and 19.5% of AUM as of June 30, 2024, respectively. The company is a diversified business group with interests across various sectors. As of June 30, 2024, they had 323,881 active customers, with 83.2% home loan customers. The company’s overall loan disbursements were Rs. 446.6 bn in FY24, indicating a growth in business and market reach. To support offerings, Bajaj Housing had a network of 215 branches as of June 30, 2024, spread across 174 locations in 20 states and three union territories, which are overseen by six centralized hubs for retail underwriting and seven centralized processing hubs for loan processing.
Objective of the Bajaj Housing Finance Ltd IPO
The net proceeds from the fresh issue will be used towards the following purposes:
- Augmenting capital base to meet future business requirements of company towards onward lending;
- General corporate purposes.
Rationale To Invest In Bajaj Housing Finance Ltd IPO
Second largest HFC with proven track record of strong growth led by diversified portfolio
The company has demonstrated a consistent growth trajectory over its seven-year operational history. This includes navigating significant challenges such as the NBFC crisis, the downturn of key industry players, and the unprecedented impact of the COVID-19 pandemic. This resilience highlights the company’s robust business model and active management decision. The company’s business model and strong risk management policies have been crucial in sustaining this growth momentum. Consequently, according to the CRISIL MI&A Report, the company has grown to be the second-largest HFC and the eighth-largest NBFC-UL in India (in terms of AUM) as of March 31, 2024. Bajaj Finance AUM has grown at a CAGR of 30.9% from FY22 to FY24. This strong growth highlights the company’s ability to expand its market presence and increase its financial performance. The company’s strength also lies in its strategic diversification, offering an extensive range of financial solutions that cater to the nuanced needs of both retail and commercial clients. The company’s diversified product portfolio combined with its extensive customer base and focus on cross-selling allows it to benefit from the growth in the housing finance market.
Widespread recognition as a reliable retail brand with strong brand equity
The Bajaj group of businesses are retail-focused enterprises that have gained recognition among Indian consumers. The Bajaj brand has consequently evolved into a recognized retail brand and contributed to the recognition and growth of the business. Additionally, the company’s market position is reflected in its strong credit ratings, underscoring its financial stability and investor confidence. The financial services businesses of the Bajaj group are primarily carried out through subsidiaries of Bajaj Finserv Ltd., one of which is Bajaj Finance Ltd., the parent company. The company along with other subsidiaries of Bajaj Finance Ltd, conducts its operations under the Bajaj Finserv brand. To further leverage and strengthen the brand among the customer base, the company has created their website and application under Bajaj Finserv to ensure that customers remain engaged with the brand positioned to tap into its extensive experience in scaling financial services. Bajaj Finance Ltd.’s proven track record in effectively growing its lending business serves as a strong foundation for it to expand its mortgage lending operations. On April 7, 2022, and April 3, 2024, the company successfully secured an additional capital infusion of Rs. 25 bn and Rs. 20 bn, respectively via a rights issue to Bajaj Finance Ltd. This infusion reflects the parent company’s support and commitment and also provides them with a dependable credit line, ensuring ready access to funds.
Valuation of Bajaj Housing Finance Ltd IPO
Bajaj Housing Finance Ltd. is the largest non-deposit-taking HFC promoted by Bajaj Finance Ltd. and has been engaged in mortgage lending since FY18, with an AUM of Rs. 971 bn as of Q1FY25. The HFC operates through a network of 215 branches, focusing its segment efforts on the top 20-30 cities while concentrating its commercial segment activities in the top 8 metro cities. This strategic geographic focus aligns with the broader industry trends. In addition, the HFC has also maintained a comprehensive risk management framework supported by digitized processes tailored to each product offering, ensuring early warning systems that track key indicators, such as bounce rates and overdue positions. Further, the company has a strong in-house four-tier collections infrastructure comprising touch-free collection (tele-calling), field collection, legal recovery, and settlement to help them with loan collections. It has also set up a specialized collections team to manage cases where collections are overdue for a certain period as well as a separate team to focus on the resolution of cases through SARFAESI (Act). As a result, the collection efficiency improved from 98.4% in FY22 to 99.5% in FY24. These credit and risk management policies have helped it to maintain the lowest GNPA and NNPA amongst the industry peers. The company’s AUM has grown at a CAGR of 30.9% between FY22 and FY24. This growth trajectory positions the company as the fourth fastest-growing NBFC within the upper-layer category (as per RBI) in India. The company has demonstrated robust performance through strategic emphasis on enhancing direct home loan origination and increasing Average Ticket Size across its product suite. These measures have contributed to an improved Opex/Asset ratio in recent years. Additionally, the strategic shift in AUM and product mix has mitigated the adverse effects of rising funding costs on the portfolio spread. The issue is valued at a P/BV of 3.8x on the upper price band based on FY24 book value, which is fairly valued. We, therefore, recommend a Subscribe rating for the issue on the back of a strong credit underwriting process and risk management framework which helps in mitigating adverse effects on the asset quality.
What is the Bajaj Housing Finance Ltd IPO?
Bajaj Housing Finance IPO is a book built issue of Rs 6,560.00 crores. The issue is a combination of fresh issue of 50.86 crore shares aggregating to Rs 3,560.00 crores and offer for sale of 42.86 crore shares aggregating to Rs 3,000.00 crores. Login to your account now – https://campaign.stoxbox.in/redirect.html
How to apply for the Bajaj Housing Finance Ltd IPO through Stoxbox?
To apply for the Bajaj Housing Finance Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Bajaj Housing Finance Ltd IPO open?
Bajaj Housing Finance Ltd IPO is opening on 09th September 2024. Apply Now
What is the lot size of the Bajaj Housing Finance Ltd IPO?
The Lot Size of Bajaj Housing Finance Ltd IPO is 214 equity shares. Login to your account now – https://campaign.stoxbox.in/redirect.html
When is the Bajaj Housing Finance Ltd IPO allotment date?
The allotment Date for Bajaj Housing Finance Ltd IPO is 12th September 2024. Login to your account now – https://campaign.stoxbox.in/redirect.html
When is the Bajaj Housing Finance Ltd IPO listing date?
The listing Date for Bajaj Housing Finance Ltd IPO is 16th September 2024. Login to your account now – https://campaign.stoxbox.in/redirect.html
What is the minimum investment required for the Bajaj Housing Finance Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,980. Login to your account now – https://campaign.stoxbox.in/redirect.html
What is the maximum investment allowed for the Bajaj Housing Finance Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 194,740. Login to your account now – https://campaign.stoxbox.in/redirect.html
What are the risks associated with investing in the Bajaj Housing Finance Ltd IPO?
- The company’s inability to fully recover the collateral value or the sums due from defaulted loans promptly or entirely could adversely affect business, results of operations, cash flows, and financial condition.
- If the company is unable to control the level of Gross Non-Performing Assets/Stage 3 Assets in the portfolio effectively or is unable to maintain adequate provisioning coverage or if there is any change in regulatory-mandated provisioning requirements, its financial condition and results of operations could get adversely affected.
- If a company fails to comply with the requirements stipulated by the Reserve Bank of India, it could harm business, results of operations, cash flows, and financial condition.
- The company AUM is concentrated in four states and the union territory of New Delhi and any adverse developments in these regions could harm business, results of operations, cash flows, and financial condition.
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When will the Bajaj Housing Finance Ltd IPO shares be credited to my Demat account?
The Bajaj Housing Finance Ltd IPO be credited to the account on allotment date which is 13th September 2024. Login to your account now – https://campaign.stoxbox.in/redirect.html
Where can I find the Bajaj Housing Finance Ltd IPO prospectus?
The prospectus of Bajaj Housing Finance Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Bajaj Housing Finance Ltd IPO?
| IPO Open Date | Monday, September 9, 2024 |
|---|---|
| IPO Close Date | Wednesday, September 11, 2024 |
| Basis of Allotment | Thursday, September 12, 2024 |
| Initiation of Refunds | Friday, September 13, 2024 |
| Credit of Shares to Demat | Friday, September 13, 2024 |
| Listing Date | Monday, September 16, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on September 11, 2024 |
