The offered mega listing marks the comeback of the Bajaj group to the public market after many years.
IPO Details and Regulatory Compliance
Bajaj Housing Finance, a subsidiary of Bajaj Finance, has announced its initial public offering (IPO), which includes a fresh issue of equity shares up to Rs 4,000 crore and an offer for sale, pending market conditions.
This information was disclosed in an exchange filing on June 6. The draft red herring prospectus is expected to be filed with the Securities and Exchange Board of India (SEBI) shortly, as per sources from Moneycontrol.
RBI’s Regulatory Norms for NBFCs
The IPO aligns with the Reserve Bank of India’s (RBI) regulatory requirements for “upper layer” non-banking financial companies (NBFCs) to list within three years of notification. This listing marks Bajaj Group’s return to the public market after a significant period.
The regulatory framework introduced by RBI on September 30, 2022, includes a Scale Based Regulation for NBFCs, categorizing them into Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL), and Top Layer (NBFC-TL). Bajaj Housing Finance, among others like Tata Sons and HDB Financial Services, falls under the Upper Layer, necessitating compliance with the listing timeline.
Market Context and Comparisons
Recent market entrants in the home finance segment, such as Blackstone-backed Aadhar Housing Finance and Westbridge-backed India Shelter Finance, have seen their stocks rise by 5.10 percent and 5.62 percent respectively in the last month.
Bajaj Housing Finance’s IPO will position it among these newly listed entities, aiming to capture a share of the market enthusiasm.
Bajaj Housing Finance Overview
Bajaj Housing Finance, headquartered in Pune, serves over 76.5 million customers across India. It offers a range of financial products, including home and commercial property loans, loans against property, working capital loans, and finance for developers.
For the nine months ending December 31, the company reported a 31 percent increase in assets under management to Rs 85,929 crore and a 31 percent rise in disbursements to Rs 25,308 crore. Net profit for the period saw a 41 percent increase, reaching Rs 1,350 crore.
Market Forecast and Prospects
PhillipCapital projects Bajaj Housing Finance’s listing to occur by September 2025, with an estimated share price of Rs 550-570. The brokerage firm’s positive outlook on Bajaj Housing Finance is driven by its focus on salaried home loans, stable expense ratios, and low credit costs, leading to strong return ratios.
Conclusion
Bajaj Housing Finance’s IPO is a significant move to comply with RBI regulations and capitalize on favorable market conditions.
The company’s robust financial performance and strategic focus on key market segments position it well for a successful public offering. The listing will not only meet regulatory requirements but also potentially enhance the company’s market presence and financial strength.
