Top Stocks to Buy After Bajaj Housing Finance IPO Impact: Potential for 30% Surge

Bajaj Housing Finance’s initial public offering (IPO) has created a buzz in the Indian stock market, with its listing date set for September 16, 2024. The IPO has garnered unprecedented interest, receiving bids worth over ₹3.2 lakh crore, which is a record in the history of Indian IPOs. This remarkable demand reflects the strong fundamentals of the company and the backing of the reputable Bajaj Group.

Record-Breaking Subscription

The IPO, which aimed to raise ₹6,560 crore, was oversubscribed by 67.4 times, with institutional investors showing particularly strong interest. The qualified institutional buyer (QIB) segment was subscribed an astonishing 222 times, while non-institutional investors (NIIs) and retail investors also showed significant participation. The retail portion was subscribed 7.04 times, indicating robust interest from individual investors.

The grey market premium (GMP) for Bajaj Housing Finance shares is currently estimated at around ₹75.5 to ₹79.5, suggesting a potential listing price of approximately ₹145.5 to ₹149.5 per share. This represents a premium of nearly 108% over the IPO price of ₹70 per share. Analysts are optimistic that the stock could double investors’ wealth on the listing day itself, making it a highly anticipated event in the market.

Strong Financials and Growth Potential

Bajaj Housing Finance has demonstrated impressive growth, with its assets under management (AUM) reaching ₹97,100 crore as of the first quarter of FY25. The company has reported a profit growth of 56.2% from FY22 to FY24, showcasing its strong financial metrics. The combination of a solid business model, a reputable brand, and significant investor interest positions Bajaj Housing Finance for a successful debut.

Industry experts like Shivani Nyati from Swastika Investment highlight that the company’s association with the Bajaj Group lends credibility and trust. The IPO’s valuation is seen as reasonable, further fueling investor optimism. Analysts believe that Bajaj Housing Finance is well-positioned to capitalize on the growing demand in the housing finance sector, which has been expanding at a rate of 13-15% annually.

Broader Market Impact

The excitement surrounding Bajaj Housing Finance’s IPO has also positively impacted the broader housing finance sector. Stocks of other housing finance companies have surged, with some experiencing gains of up to 15% in anticipation of the listing. Companies like GIC Housing Finance, Home First Finance, and Repco Home Finance have seen their shares rise significantly, reflecting a renewed interest in the sector.

Market analysts suggest that the successful listing of Bajaj Housing Finance could trigger a rerating of the entire non-banking financial company (NBFC) sector. Despite facing challenges like rising funding costs, the overall credit quality of NBFCs remains solid. The anticipated interest rate cuts are expected to further enhance the sector’s attractiveness.

Expert Recommendations

Rahul Arora from Nirmal Bang Institutional Equities has expressed a bullish outlook on Bajaj Housing Finance and the broader BFSI sector. He anticipates a 30-35% growth in the stock post-listing, with other housing finance stocks like Repco Home Finance and HUDCO also expected to perform well. Arora suggests that investors should take advantage of the positive momentum in the market, indicating that there are still opportunities to earn in the housing finance sector.

In addition to housing finance stocks, Arora has recommended investing in gold, predicting a potential 15% increase in gold prices. He also sees growth potential in the quick-service restaurant sector, highlighting companies like Westlife Foods and Jubilant Foodworks.

Disclaimer: The information given in this article is from investment experts and brokerage companies, they do not represent Local Haryana. Before taking any investment related decision, you must consult a certified expert.