Bajaj Housing Finance’s shares double, valued at £16 bn in market debut

BAJAJ Housing Finance's shares more than doubled on their trading debut on Monday, marking the fourth-best listing of the year in India's strong IPO market. The company's value reached £16 billion, nearly three times that of its closest rival.

The strong debut follows significant interest in Bajaj Housing's £592 million initial public offering, the largest and most subscribed IPO in India for 2024. The demand was driven by the company’s connection to the Bajaj group, a growing appetite for higher-end homes, and strong financials, including lower levels of bad loans compared to competitors.

The stock opened at 1,356 rupees per share, a 114 per cent jump from its issue price of 637 rupees, making it the fourth-largest listing gain this year. By the end of the day, the share price had risen 135.7 per cent to 1,394 rupees, with the company’s market value reaching 151 billion rupees, or £1.37 billion. The next biggest competitor in the home finance space, HUDCO, is valued at £4.5 billion.

This rise in Bajaj Housing’s shares comes as the broader market nears record highs, supported largely by domestic investor interest. Despite healthy demand for IPOs, with 235 companies raising over £6.4 billion so far this year, analysts caution that the initial gains may not last.

Of the three companies with bigger listing gains this year, only two have maintained their upward trajectory. Analysts point to high valuations as a reason for concern, a sentiment extended to Bajaj Housing.

"This IPO is attracting a lot of attention because it's backed by a large group, but the valuation looks steep right now," said Asutosh Mishra, head of research at Ashika Stock Broking. "The stock may underperform in the medium term, even though the company's financial performance is strong, as the initial excitement could cool off."

However, Sanjiv Bajaj, chairman of Bajaj Housing, told CNBC-TV18 that the company's net interest margin is expected to remain stable, and forecasted industry-wide credit growth of 12 per cent-15 per cent. Bajaj Housing reported a net interest margin of 3.9 per cent in the latest quarter.

The company's listing had an impact on competitors: HUDCO shares fell 2 per cent, LIC Housing dropped 6 per cent, and PNB Housing slid by 6.6 per cent.

Bajaj Housing Finance, a subsidiary of Bajaj Finance, reported assets under management (AUM) of over £8.8 billion as of June 30, positioning it as the second-largest home loan financier by AUM, behind LIC Housing. The company’s profit grew by 38 per cent in the last fiscal year.

(With inputs from Reuters)