Bajaj Housing Finance, the second largest housing finance company in terms of assets under management, trailing LIC Housing Finance. The company opened its IPO on September 09. It will close on September 11.
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The stocks of Bajaj Housing Finance clocked a premium of 100% in the grey market. It is an unofficial place where shares trade illegally ahead of listing.
Bajaj Housing Finance Valuation
Talking about the valuation of Bajaj Housing Finance, the company’s price-to-earnings ratio stood at 33.7x in FY24, which has fallen in the last three years. It was 46.3x in the previous financial year and 82.2x in FY22. Although, it is still very high compared to the industry P/E ratio of 19.93. The housing finance company’s earnings per share or profit earned on every share for the financial year 2024 stands at Rs 21, which has increased over the past three years.
To compare, the P/E of its peers, LIC Housing Finance is 7.95x, PNB Housing Finance is 17.1x, and Can Fin Homes is 14.73x.
Bajaj Housing Finance’s price-to-book ratio stands at 4.8 times, which is much higher than the industry P/B of 2.49 times.
However, InCred Equities in an IPO note justified the high valuations of the company saying that it is justified given its (the company’s) robust growth, sturdy asset quality & superior tech-enabled platform.
“At the upper end of the price band (Rs 70), the issue is valued at 3.2x Jun’24 of its book value (post-money) with a return on asset of 2.3% and return on equity of 14.3%, which looks favourable. Hence, we recommend investors to subscribe to this issue,” said Systematix Institutional Equities in a research report.
The company has a good ground network with 215 branches and offices spread across India. Plus, the company is backed by the strong parent company’s name “Bajaj”.
“The company is well positioned to capitalize on the healthy demand in the housing finance sector in India and given its strong track record of delivering superior growth coupled with healthy return ratios and pristine asset quality valuation looks comfortable, though at a premium,” said Systematix.
Bajaj Housing Finance IPO Details
The company wants to collect Rs 6,560 crore through a combination of fresh capital and sale of secondary shares. The company kept the IPO price band in a range of Rs 66 to 70 per equity share.