Bajaj Housing Finance’s Remarkable Stock Market Debut: Shares List at a 114% Premium Over IPO Price

Bajaj Housing Finance shares made a strong debut on Monday, trading at more than double the offer price in pre-open trade as investors anticipated robust growth in the thriving home loan market.

The housing finance company started trading with an impressive 114% premium. Shares opened at ₹150 on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), significantly higher than the issue price of ₹70. Ahead of the listing, the shares had been trading at a Grey Market Premium (GMP) of 120% above the issue price.

Later in the day, the stock price surged dramatically, climbing 129.88% on the BSE to reach ₹160.92. On the NSE, the shares soared by 130%, hitting ₹161. Following this impressive rise, the company's market capitalisation was valued at ₹1,30,751.90 crore.

Bajaj Housing Finance's initial public offering (IPO), which raised ₹6,560 crore, has become the largest IPO of the year. The public issue received an overwhelming response from investors, with subscriptions reaching nearly 67 times the number of shares offered.

Despite the strong market debut, analysts advise caution for retail investors due to the stock's current valuation, trading at nearly 10 times its book value. While there is optimism about the company's growth potential, experts suggest careful consideration before making further investments. Shriram Subramanian, founder and MD at InGovern Research Services, remarked, "As anticipated, the Bajaj Housing Finance stock listed at a substantial premium to the IPO price. The company, backed by the Bajaj Finance brand, operates a high-quality business with professional management. However, investors should be cautious about buying into the stock at its current valuation, as it is trading at stretched levels close to 10 times book value."

Bajaj Housing Finance is a prominent provider of mortgage loans in India, serving both high-end individual homebuyers and large-scale developers. Backed by its parent company, the Bajaj Group, the firm has built a comprehensive distribution network throughout the country. As of June 30, 2024, Bajaj Housing Finance operates 215 branches across 174 locations in 20 states.

Although the company entered the mortgage market only seven years ago, it has rapidly become the largest non-deposit-taking Housing Finance Company (HFC) in India, based on Assets Under Management (AUM).