LIC Housing, PNB Housing shares dip up to 6.3% as Bajaj Housing Finance makes stellar debut

After witnessing Bajaj Housing Finance's phenomenal debut on the Indian stock exchanges, investors lucky enough to be allotted the shares were left exhilarated, eagerly crunching the numbers to calculate their remarkable profit margins.

The stock's impressive performance saw investments doubling within minutes of its listing. The shares debuted on the NSE at ₹150 each, representing a staggering 114.29 per cent premium to their IPO price of ₹70 each.

This stellar listing of Bajaj Housing Finance shares comes from strong demand for its initial public offering (IPO), which received a record amount of subscriptions exceeding ₹3 lakh crore bids, compared to the IPO size of ₹6,560 crore. The IPO price band is between ₹66 and ₹70 per share. It was the largest IPO of the year so far, and with its current gains, the shares now rank as the second-best performer among main board IPOs.

Peers facing the heat

Post-listing, the shares continued to climb, reaching ₹165, a 10 per cent increase from their initial listing price. With Bajaj Housing Finance's strong performance, peer stocks such as LIC Housing Finance, PNB Housing Finance, and Can Fin Homes have experienced declines, with losses of up to 6.3 per cent.

Analysts explain that the peer companies have weak fundamentals compared to the Bajaj Housing Finance. Before listing the Bajaj Housing shares, analysts expressed optimism about the company despite its higher valuations relative to peers. They highlighted BHFL's strong and diversified assets under management, excellent asset quality with non-performing assets (NPAs) below 1 per cent, and a superior technology platform enabling it to remain relevant in a stiff competitive environment.

According to SBI Securities, Bajaj Housing Finance Limited is the second-largest housing finance company in India with an asset under management (AUM) of ₹97,071 crore. It boasts the lowest gross and net non-performing asset (GNPA and NNPA) ratios among major housing finance companies, at 0.28 per cent and 0.11 per cent, respectively.

SBI Securities also highlighted BHFL's impressive AUM growth of 30.9 per cent and profit growth of 56.2 per cent from FY22 to FY24. The company's strong association with the Bajaj brand is noted as a significant factor, and a projected industry growth rate of 13 per cent to 15 per cent over the next three years positions BHFL to benefit from the expanding housing finance sector.

Bajaj Housing Finance is part of the esteemed Bajaj Group, a leading Indian conglomerate with a diverse portfolio. The group includes prominent listed entities such as Bajaj Finance, a top non-banking financial company, and Bajaj Auto, a key player in the automotive sector.

Established in 2008 and a registered non-deposit-taking housing finance company with the National Housing Bank (NHB) since 2015, Bajaj Housing Finance began offering mortgage loans in FY18. It is wholly owned by Bajaj Finance, which is 51.34 per cent owned by Bajaj Finserv. Both are classified as promoters of Bajaj Housing Finance.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.