Bajaj Housing Finance IPO Jumps 135% on Listing Day – How to Buy Shares After the IPO

Bajaj Housing Finance made headlines with its impressive stock market debut. The much-anticipated IPO, which opened for subscription from September 9 to September 11, was subscribed a staggering 63.61 times, indicating overwhelming interest from investors. The initial public offering (IPO) raised ₹6,560 crore, with a price band set between ₹66 and ₹70 per share. Upon listing, the shares debuted at ₹150, reflecting a remarkable 114% premium over the issue price. By the end of the day, the stock soared further to reach an upper circuit limit of ₹164.99, marking a total gain of approximately 135% on the first day of trading.

Overview of Bajaj Housing Finance IPO

The IPO consisted of a fresh issue of equity shares worth up to ₹3,560 crore and an offer-for-sale (OFS) component of ₹3,000 crore by its parent company, Bajaj Finance. This strategic move was aimed at enhancing the company’s capital base and complying with regulatory requirements set by the Reserve Bank of India (RBI), which mandates that upper-layer non-banking financial companies (NBFCs) must be listed by September 2025.

Bajaj Housing Finance is classified as an ‘upper layer’ NBFC and provides various financial solutions for residential and commercial properties. Its offerings include home loans, loans against property, lease rental discounting, and developer financing.

Should You Buy Bajaj Housing Finance Shares Now?

Investors who missed out on the IPO are now contemplating whether to buy shares at the current elevated prices. Analysts have mixed opinions on this matter. While some suggest that Bajaj Housing Finance has strong growth potential in the long term, others caution against chasing the stock at its current valuations.

Bajaj Housing Finance IPO Current Valuation Concerns

As of now, Bajaj Housing Finance commands a market capitalization exceeding ₹1.36 lakh crore and trades at a price-to-book (P/B) ratio of around 6x. This valuation is significantly higher than most housing finance companies, which typically trade at P/B ratios between 1 and 2.5 times. Analysts like Chakri Lokapriya have advised investors against buying at these high valuations, suggesting that there are better alternatives in the housing finance sector such as PNB Housing or LIC Housing.

Prashanth Tapse from Mehta Equities recommends that conservative investors consider booking profits following the substantial listing gains. He believes that while the company is well-positioned for long-term growth in a promising sector, the current market price may not offer much room for further upside.

Bajaj Housing Finance IPO Long-Term Growth Potential

Despite concerns about high valuations, some analysts maintain an optimistic outlook for Bajaj Housing Finance’s long-term prospects. Deven Choksey from DRChoksey FinServ expressed confidence that investors willing to hold onto their shares for ten years could see significant wealth accumulation. Similarly, Prathamesh Masdekar from Stoxbox advises keeping the stock for medium to long-term gains.

Narendra Solanki from Anand Rathi also highlighted that while immediate gains may be limited due to high valuations, the overall fundamentals and outlook for Bajaj Housing Finance remain strong. The company is expected to benefit from ongoing growth in the housing finance sector over the next few years.

Investment Strategies for Missed IPO Applicants

For those who missed out on the IPO lottery but still wish to invest in Bajaj Housing Finance shares, experts suggest adopting a cautious approach:

1. Partial Positioning: Some analysts recommend entering the stock gradually when it offers better pricing opportunities. V.L.A. Ambala advises using about 50% of your intended investment to buy shares within a price range of ₹80-100.
2. Long-Term Perspective: Investors are encouraged to adopt a long-term view when considering Bajaj Housing Finance as a potential multibagger stock. The company’s solid business model and growth trajectory could yield substantial returns over time.
3. Profit Booking: For those who secured allotments during the IPO, analysts like Shivani Nyati suggest considering profit booking at current levels while setting a stop-loss strategy to manage risks effectively.
4. Continuous Monitoring: Investors should keep an eye on market conditions and company performance regularly to make informed decisions about holding or selling their positions.

Market Sentiment and Future Outlook

The strong response to Bajaj Housing Finance’s IPO signals renewed investor confidence in housing finance companies amid favorable economic conditions. Analysts believe that this IPO could lead to a re-rating of other private NBFCs in the market that have shown consistent growth over recent years but have not performed well in terms of stock prices.

As interest rates stabilize or potentially decline in the future, sectors sensitive to interest rates—such as housing finance—are expected to perform well. This could create further opportunities for Bajaj Housing Finance as it seeks to expand its market share in this competitive landscape.