Firm Profile:
Bajaj Housing Finance Ltd is a non-deposit taking Housing Finance Firm (HFC), registered with the Nationwide Housing Financial institution (NHB) since September 24, 2015, and engaged in mortgage lending since Fiscal 2018. It has been recognized and categorized as an “Higher Layer” NBFC (NBFC-UL) in India by the RBI since September 30, 2022, as a part of its “Scale Based mostly Rules (SBR): A Revised Regulatory Framework for NBFCs” dated October 22, 2021.
It provides monetary options tailor-made to people and company entities for the acquisition and renovation of properties and business areas. Its mortgage product suite is complete and contains (i) dwelling loans; (ii) loans towards property (LAP); (iii) lease rental discounting; and (iv) developer financing. Moreover, its major emphasis is on particular person retail housing loans, complemented by a diversified assortment of lease rental discounting and developer loans. Consequently, its monetary merchandise cater to each buyer section, from particular person homebuyers to large-scale builders.
As of March 2023, the entire general excellent housing loans (excluding Pradhan Mantri Awas Yojana loans) have been roughly Rs. 28.7 trillion. It’s strategic focus is on low danger and quick rising dwelling mortgage clients and as of March 31, 2024, dwelling loans contributed 57.8% of its AUM, of which 87.5% pertained to salaried clients, 4.3% self-employed skilled clients and eight.2% self-employed non-professional clients.As of June 30, 2024, the corporate had 323,881 lively clients, 83.2% of whom have been dwelling mortgage clients. General mortgage disbursements elevated to Rs. 44656.24 cr in FY24 from Rs. 26175.24 cr in FY22, which demonstrates a development in enterprise and market attain. The corporate had a community of 215 branches as of June 30, 2024, unfold throughout 174 areas in 20 states and three union territories, that are overseen by six centralized hubs for retail underwriting and 7 centralized processing hubs for mortgage processing.
Promoters & Shareholding:
Bajaj Finance Restricted and Bajaj Finserv Restricted are the corporate promoters.
| Particulars | Pre – Challenge | Put up – Challenge |
| Promoters & Promoters Group | 100% | 88.75% |
| Others | 0 | 11.25% |
Public Challenge Particulars:
Supply on the market: Recent challenge of approx. 508,571,429 fairness shares of Rs. 10, aggregating as much as 3,560 Cr and OFS of approx. 428,571,429 fairness shares at Rs. 10, aggregating as much as Rs. 3,000 Cr.
Complete IPO Measurement: Rs. 6,560 Cr.
Worth band: Rs. 66 – Rs. 70.
Goal: Augmenting its capital base to fulfill its future capital necessities and for basic company functions.
Bid qty: minimal of 214 shares (1 lot) for Rs. 14,980 and most of 13 tons.
Supply interval: Monday, September 9, 2024 – Wednesday, September 11, 2024.
Date of itemizing: Monday, September 16, 2024.
Execs:
- The “Bajaj” model has a prestigious legacy and is widely known as a reliable retail title, identified for its sturdy model worth and popularity.
- The second-largest housing finance firm (HFC) in India by property beneath administration (AUM), with a confirmed historical past of sturdy development fueled by a various portfolio.
- A well-established strategic presence, using an omni-channel sourcing strategy powered by customer-focused digital initiatives and technological developments.
- Clear credit score analysis and danger administration practices have led to the bottom Gross Non-Performing Belongings (GNPA) and Internet Non-Performing Belongings (NNPA) amongst friends in Fiscal 2024.
- An skilled administration crew, backed by a devoted group of pros, with the potential to draw and retain prime expertise.
Dangers:
- Buyer Danger: The house mortgage portfolio primarily consists of salaried and self-employed people who might face challenges like enterprise failure, insolvency, liquidity points, unemployment, or private emergencies.
- The housing finance business is extremely aggressive and if the corporate just isn’t in a position to compete successfully, it may adversely have an effect on the enterprise.
- Portfolio is considerably uncovered to actual property and any vital downturn or any opposed developments in the actual property sector.
- The Firm might face rate of interest and maturity mismatches between its property and liabilities sooner or later.
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Sectorial outlook – The housing finance sector in India has skilled vital enlargement, with the prime housing finance market reaching ₹11.5 lakh crores by Fiscal 2024. This development, at a compound annual development charge (CAGR) of 20.1% from Fiscal 2019 to Fiscal 2024, surpasses the general housing finance market’s CAGR of 13.1%. Contributing elements embrace fast urbanization, enhanced infrastructure, and rising actual property costs, which appreciated by 5-7% in Fiscal 2023 and 4% in Fiscal 2024, with forecasts suggesting a 3-5% improve in Fiscal 2025.
On this thriving sector, Bajaj Finance Ltd. stands out because of its strong efficiency. As of March 31, 2024, the corporate’s property beneath administration (AUM) had reached ₹91,370.40 crores, reflecting a notable CAGR of 30.9% from FY22 to FY24. By June 30, 2024, AUM grew to ₹97,071.33 crores. The corporate’s dwelling mortgage portfolio options a median ticket dimension of ₹46 lakhs and a median loan-to-value ratio of 69.3%. Impressively, 75.5% of its dwelling mortgage AUM is from clients with a CIBIL rating above 750. Moreover, Bajaj Finance’s numerous portfolio consists of 10% in loans towards property (LAP), 11.2% in developer finance for residential and business initiatives, and 19.5% in lease rental discounting for business properties.
These sturdy metrics and the favorable market dynamics underscore Bajaj Finance Ltd.’s strategic place throughout the increasing housing finance sector. As such, the corporate’s IPO is well-positioned to draw vital investor curiosity, reflecting its sturdy development trajectory and alignment with the sector’s optimistic outlook.
The financials (income and web revenue) are proven within the graph under:
Valuation – For the final 3 years common EPS is Rs. 2 and the P/E is round 35x on the higher worth band of Rs. 70. EPS for Jun-24 is Rs. 0.6 and by annualizing the EPS the present P/E is round 29.16x. It has LIC Housing Finance (8.26x), PNB Housing Finance (17.3x), Can Fin Properties (15x), Aadhar Housing Finance (24.6x), Aavas Financier (28.6x), Aptus Worth Housing (24.5x), and House First Finance (29.7x) as their listed friends as per the RHP. The corporate’s P/E is between 29x and 35x. Income and margins has been rising persistently. Its GNPA is round 0.3% and NNPA is 0.1%.
Suggestion – Bajaj Finance Ltd. presents a compelling funding alternative with its sturdy efficiency and strategic place throughout the increasing housing finance sector in India. The corporate’s spectacular development, with property beneath administration and its stable portfolio of high-quality dwelling mortgage clients underscore its strong fundamentals.Nonetheless, in comparison with its peer group, the IPO valuations seem comparatively excessive. Given this, whereas the corporate is essentially sturdy and well-positioned for future development, we advocate adopting a “purchase on dips” strategy as soon as the inventory is listed. This technique will enable traders to reap the benefits of potential worth corrections and safe a extra beneficial entry level whereas nonetheless benefiting from the corporate’s sturdy market outlook and efficiency.
Disclaimer:
This text shouldn’t be construed as funding recommendation, please seek the advice of your Funding Adviser earlier than making any sound funding choice.
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