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Bajaj Housing Finance IPO Listing: The highly anticipated Bajaj Housing Finance IPO has generated a fear of missing out (FOMO) among investors, as the stock not only debuted with an impressive 114% premium but also gained an additional 9% post-listing.
With a current market valuation of Rs 1.36 lakh crore, Bajaj Housing shares now trade at a price-to-book (P/B) multiple of 6x, which, according to analysts, leaves limited room for further upside potential.
The Rs 6,560 crore IPO attracted a record-breaking Rs 3.2 lakh crore in bids, resulting in an oversubscription of 63.61 times, with approximately 89 lakh investors eagerly awaiting allotment.
According to an ET report, analysts advise unsuccessful IPO applicants to refrain from pursuing the stock at the current elevated valuations.
Chakri Lokapriya, a seasoned investor on Dalal Street, was quoted as saying, “Apart from the rate of loan and quality of service, housing finance is a commoditized business. So I would rather buy the other housing companies – PNB Housing, LIC Housing – rather than try to buy now. If you are lucky enough to have gotten the IPO, then I would be a seller on listing.”
Prashanth Tapse of Mehta Equities advised, “Post listing, we recommend conservative investors to choose profit booking, as listing gain is over and above our expectations, while long-term investors can continue holding for long-term growth as the sector outlook remains very optimistic given the company’s well-positioned business model. We believe housing as a sector will continue to deliver and perform well in the next 3-4 years and Bajaj Housing can tap the opportunity to lead the sector.”
He noted that at the issue price of Rs 70 per share, Bajaj Finance shares were valued at 3x P/BV, but post-listing, the valuations have stretched to 6x P/BV, the highest in the industry.
Shivani Nyati, Head of Wealth at Swastika Investmart, advised investors who secured allotments in the IPO to consider booking profits now. However, those who wish to hold their positions may do so by setting a stop loss at Rs 135 as a risk management strategy.
Nyati emphasized the importance of continuously monitoring the company’s performance and market conditions to make informed decisions.
Deven Choksey, managing director of DRChoksey FinServ, expressed his belief that investors who hold the stock for a decade “will be most wealthy.” Similarly, Prathamesh Masdekar from Stoxbox recommended investors to keep the stock for the medium-to-long term.
Narendra Solanki of Anand Rathi pointed out that most housing finance companies trade at an estimated P/B ratio of 1-2.5 times. “This gives it the highest valuation among peers, and a 25% premium from the next company in line which is Home First Finance Company,” he said.
The Bajaj Housing Finance IPO is anticipated to bring attention to other listed NBFCs, particularly in the housing finance sector.
Krishna Appala from Capitalmind Research noted, “We see that this IPO may lead to a re-rating of private NBFCs in the markets, which have grown at 15-20% in the past three years, but the stocks have not performed much.” Appala also mentioned that even parent company Bajaj Finance grew at a 25-26% CAGR over the past three years and has provided excellent returns.
With a current market valuation of Rs 1.36 lakh crore, Bajaj Housing shares now trade at a price-to-book (P/B) multiple of 6x, which, according to analysts, leaves limited room for further upside potential.
The Rs 6,560 crore IPO attracted a record-breaking Rs 3.2 lakh crore in bids, resulting in an oversubscription of 63.61 times, with approximately 89 lakh investors eagerly awaiting allotment.
According to an ET report, analysts advise unsuccessful IPO applicants to refrain from pursuing the stock at the current elevated valuations.
Chakri Lokapriya, a seasoned investor on Dalal Street, was quoted as saying, “Apart from the rate of loan and quality of service, housing finance is a commoditized business. So I would rather buy the other housing companies – PNB Housing, LIC Housing – rather than try to buy now. If you are lucky enough to have gotten the IPO, then I would be a seller on listing.”
Prashanth Tapse of Mehta Equities advised, “Post listing, we recommend conservative investors to choose profit booking, as listing gain is over and above our expectations, while long-term investors can continue holding for long-term growth as the sector outlook remains very optimistic given the company’s well-positioned business model. We believe housing as a sector will continue to deliver and perform well in the next 3-4 years and Bajaj Housing can tap the opportunity to lead the sector.”
He noted that at the issue price of Rs 70 per share, Bajaj Finance shares were valued at 3x P/BV, but post-listing, the valuations have stretched to 6x P/BV, the highest in the industry.
Shivani Nyati, Head of Wealth at Swastika Investmart, advised investors who secured allotments in the IPO to consider booking profits now. However, those who wish to hold their positions may do so by setting a stop loss at Rs 135 as a risk management strategy.
Nyati emphasized the importance of continuously monitoring the company’s performance and market conditions to make informed decisions.
Deven Choksey, managing director of DRChoksey FinServ, expressed his belief that investors who hold the stock for a decade “will be most wealthy.” Similarly, Prathamesh Masdekar from Stoxbox recommended investors to keep the stock for the medium-to-long term.
Narendra Solanki of Anand Rathi pointed out that most housing finance companies trade at an estimated P/B ratio of 1-2.5 times. “This gives it the highest valuation among peers, and a 25% premium from the next company in line which is Home First Finance Company,” he said.
The Bajaj Housing Finance IPO is anticipated to bring attention to other listed NBFCs, particularly in the housing finance sector.
Krishna Appala from Capitalmind Research noted, “We see that this IPO may lead to a re-rating of private NBFCs in the markets, which have grown at 15-20% in the past three years, but the stocks have not performed much.” Appala also mentioned that even parent company Bajaj Finance grew at a 25-26% CAGR over the past three years and has provided excellent returns.