The buzz around the Bajaj Housing Finance IPO is heating up as the Grey Market Premium (GMP) shows a notable increase. With the listing date set for September 16, 2024, market observers are keenly watching the developments. Here’s an in-depth look at the current GMP, expert opinions, and what investors should consider before diving into the IPO.
Bajaj Housing Finance IPO GMP: Current Status
As of today, Bajaj Housing Finance IPO shares are trading at a premium of ₹79 in the grey market. This marks a rise from Friday's GMP of ₹77, reflecting increased investor optimism. The grey market sentiment suggests that the IPO will list at around ₹149, signaling a potential 110% gain for those allotted shares.
Why the GMP Is Soaring
The surge in the GMP indicates strong market confidence in the Bajaj Housing Finance IPO. Despite recent market fluctuations, the grey market remains bullish, suggesting that investors expect a robust debut for the shares. The higher GMP is a positive sign, reflecting strong demand and positive expectations for the IPO’s performance.
Expert Insights on IPO Pricing and Valuations
Experts have mixed views on the Bajaj Housing Finance IPO pricing. The anticipated listing price is projected to be between ₹145 and ₹150, which is significantly higher—about 110%—than the upper price range of the public issue. This potential valuation contrasts sharply with its nearest peer, PNB Housing Finance, which has a book value approximately 2 times lower.
Valuation Concerns and Cautions
Arun Kejriwal, Founder of Kejriwal Research and Investment Services, warns investors about potential valuation concerns. He notes that while the stock is expected to have a post-money NAV of 21 to 22, the projected book value post-listing could be 6 to 6.50 times, significantly higher than PNB Housing Finance. Kejriwal advises investors to proceed with caution, given the substantial discrepancy between expected and actual valuations.
Bajaj Housing Finance Financials: A Snapshot
Prathamesh Masdekar, Research Analyst at StoxBox, highlights the strong financial performance of Bajaj Housing Finance Limited. The company, promoted by Bajaj Finance Ltd., has been active in mortgage lending since FY18. As of Q1FY25, its Assets Under Management (AUM) stands at ₹971 billion, reflecting a compound annual growth rate (CAGR) of 30.9% between FY22 and FY24.
The company's efficient credit and risk management strategies, including a four-tier collections infrastructure, have contributed to its impressive performance. With a GNPA (Gross Non-Performing Assets) of 0.5% and NNPA (Net Non-Performing Assets) of 0.1% as of FY24, Bajaj Housing Finance maintains the lowest levels of non-performing assets among its peers.
Central Railway Services and IPO Sentiments
The Central Railway has announced 22 additional suburban train services from September 14 to 18 to accommodate the increased travel demands during the IPO listing period. This move is expected to facilitate smooth travel for investors and participants during this busy period.
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Conclusion
The Bajaj Housing Finance IPO presents a mixed bag of opportunities and risks. The GMP reflects strong market enthusiasm, but experts caution that the high expected listing price could lead to valuation challenges. Investors should weigh the positive grey market signals against potential valuation concerns and proceed with informed decisions.
