Bajaj Housing Finance IPO - Issue Details, Valuations, Financials, Key Risks And More: Systematix

Systematix Research Report

Bajaj Housing Finance Ltd, launched its initial public offering on Sept. 09 and will conclude today. A reputable non-deposit-taking housing finance company has fixed the price band in the range of Rs 66 to 70 per share. The minimum order lot for bidding is 214 shares.

The Rs 6,560 crore IPO comprises of a fresh issue amounting to Rs 3,560 crore and an offer-for-sale aggregating to Rs 3,000 crore from its promoter company Bajaj Finance. The equity shares carry a face value of Rs 10 each.

Object of the issue

• Augment capital base to meet the company’s future business requirements of onward lending

• Offer for sale

Bajaj Housing Finance is the second largest housing finance company in India in terms of AUM. The company is a wholly owned subsidiary of Bajaj Finance Ltd. and benefits from its strong parentage and expertise. The company has an average ticket loan size of Rs 4.6 million, with an average loan to value of ~70%.

Salaried segment comprised ~88% of total AUM, while self-employed and professional segment constituted ~12% as of June 2024. Bajaj Housing Finance is spread across 23 states through its network of 215 branches and offices.

The top five states - Maharashtra (32%), Karnataka (~23%), Telangana (~15%), New Delhi (~8%) and Gujarat (~8%) –accounts for >85% of its AUM as of June 2024.

NII grew at CAGR of 52% over FY19‐24, led by 39% CAGR in AUM and healthy NIMs (Avg >4% over FY22-24). Lower credit cost (Avg 36 bps) aided strong earnings CAGR of 74% over FY19‐24 resulting in healthy RoA / RoE of 2.4% / 15.2% in FY24 (2.3% / 14.3% in 1QFY25).

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