Bajaj Housing Finance Limited IPO

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They are a distinguished non-deposit taking Housing Finance Company (HFC) in India, officially registered with the National Housing Bank (NHB) since September 24, 2015. Their focus is on providing mortgage lending solutions, a core area of their business since Fiscal 2018. Recognized as an “Upper Layer” Non-Banking Financial Company (NBFC-UL) by the Reserve Bank of India (RBI) since September 30, 2022, they adhere to the “Scale Based Regulations (SBR)” introduced on October 22, 2021, which classifies NBFCs based on their size and significance to the financial system.

Product Offerings

Their product portfolio is tailored to meet the diverse needs of both individual and corporate clients, providing financial solutions for purchasing, renovating, and refinancing homes and commercial properties. Their mortgage products include:
i. Home Loans: Targeting individual homebuyers, these loans are the cornerstone of our business.
ii. Loans Against Property (LAP): Secured loans provided against residential or commercial properties.
iii. Lease Rental Discounting: Loans provided based on rental income from leased properties.
iv. Developer Financing: Tailored financial solutions for real estate developers engaged in residential and commercial projects.

Their primary focus remains on individual retail housing loans, which are complemented by a diversified mix of lease rental discounting and developer loans. This enables us to cater to a broad spectrum of customers, from individual homebuyers to large-scale real estate developers.

Risk Management and Portfolio Quality

They prioritize sourcing self-occupied residential properties as collateral for LAP to maintain a lower risk profile. As of June 30, 2024, salaried and self-employed professional customers contributed 28.9% of our LAP AUM. Their credit evaluation procedures are customized, supported by comprehensive monitoring frameworks designed to maintain strong credit quality and portfolio performance. Even in a challenging economic environment, characterized by inflationary pressures and rising interest rates, our GNPA and NNPA ratios remain among the lowest in the industry at 0.28% and 0.11%, respectively, as of June 30, 2024.

Conclusion

As part of the Bajaj Group, a diversified business conglomerate with a legacy dating back to 1926, they are well-positioned to continue their growth trajectory. Their commitment to offering a full suite of mortgage products, combined with their operational excellence and prudent risk management, positions them as a leader in India’s housing finance sector. With a strong focus on serving the housing needs of individuals and businesses, they are poised to capitalize on the significant market opportunities that lie ahead.

Objects of the Bajaj Housing Finance Limited IPO:

The company intends to utilize the net proceeds towards the following objective: i. Augment capital base to meet future business requirements of the company towards onward lending. Total number of share issue :- i. Fresh issue is 508,571,429 shares, ii. Offer for sale is 428,571,429 shares.
DRHP of Bajaj Housing Finance Limited IPO
RHP of Bajaj Housing Finance Limited IPO

Bajaj Housing Finance Limited IPO Details:

Open Date: Sep 09 2024
Close Date: Sep 11 2024
Total Shares: 937,142,858
Face Value: ₹ 10 Per Equity Share
Issue Size: 6,560.00 Cr.
Lot Size: 214 Shares
Issue Price: ₹ 66 - 70 Per Equity Share
Listing At: NSE,BSE
Listing Date: Sep 16 2024

Promoters And Management:

Sanjivnayan Bajaj is the Chairman and a Non-Executive Director of their Company. He holds degrees in mechanical engineering from the University of Pune, manufacturing systems engineering from the University of Warwick, and an MBA from Harvard Business School. He is the Chairman and Managing Director of Bajaj Finserv Limited and holds key leadership roles at Bajaj Finance Limited, Maharashtra Scooters Limited, and several other companies within the Bajaj Group. With over 27 years of experience, he has expertise in business strategy, marketing, finance, and other areas in the auto and financial services sectors. Rajeev Jain is the Vice Chairman and Non-Executive Director of their Company. He holds a post-graduate diploma in management from T.A. Pai Management Institute and has over 30 years of experience in the consumer lending industry. He has been with their Company for more than a decade and has previously worked with Countrywide Consumer Financial Services, ANZ Grindlays Bank, American Express, and AIG. Rajeev also serves as the Managing Director of Bajaj Finance Limited. Anami Narayan Roy is an Independent Director of the Company. A former Director General of Police and Police Commissioner of Mumbai, he served in the Indian Police Service for over 38 years in Maharashtra and with the Government of India. He also serves on the boards of several prominent companies, including Bajaj Finserv Limited, Bajaj Finance Limited, GlaxoSmithKline Pharmaceuticals Limited, Finolex Industries Limited, Siemens Limited, Bajaj Allianz General Insurance, Bajaj Allianz Life Insurance, and Bajaj Auto Limited.

Financials of Bajaj Housing Finance Limited IPO:

Particulars ( In Crores )
2022
2023
2024
3M-FY25
Revenue from Operations 3,767 5,665 7,617 2,209
Other Income 0.4 0.7 0.4 0.1
Total Revenue 3,767 5,665 7,618 2,209
Fees and commission expense 5 14 12 3
Impairment on financial instruments 181 124 61 10
Employees Benefit Expenses 349 435 466 113
Other Expenses 92 148 186 44
EBITDA 3,141 4,945 6,894 2,039
OPM (%) 83.38% 87.28% 90.49% 92.30%
Depreciation & Amortisation 26 33 40 10
EBIT 3,115 4,911 6,854 2,029
Finance cost 2,155 3,211 4,693 1,399
PBT 960 1,700 2,161 630
Tax 250 442 430 147
PAT 710 1258 1731 483
NPM (%) 18.84% 22.20% 22.73% 21.85%
No.of Shares 832.81 832.81 832.81 832.81
EPS 0.85 1.51 2.07 0.57

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Bajaj Housing Finance Limited 7,617 1,731 2.07 33.7 70 58,297
LIC Housing Finance Limited 27,277 4,760 86.52 8.1 696 38,309
PNB Housing Finance Limited 7,014 1,527 58.81 16.7 1,039 26,977
Can Fin Homes Limited 3,523 751 56.38 15.0 868 11,555
Aadhar Housing Finance 2,587 750 18.99 24.3 424 18,234
Aavas Financiers 2,018 491 62.00 28.7 1,837 14,540
Aptus Value Housing Finance 1,365 612 12.26 24.6 316 15,790
Home First Finance 1,157 306 34.54 30.1 1,097 9,769
* All the data is as per FY24.

Recommendation on Bajaj Housing Finance Limited IPO:

1. Bajaj Housing Finance Limited offers a comprehensive suite of mortgage products designed to cater to the diverse needs of individuals and corporate entities. 2. These products include: i. Home Loans ii. Loans Against Property (LAP) iii. Lease Rental Discounting (LRD) iv. Developer Financing 3. Branch Network and Operations They have established a wide-reaching network of 215 branches across 174 locations in 20 states and three union territories as of June 30, 2024. These branches are supported by six centralized hubs for retail underwriting and seven centralized processing hubs for loan processing. This extensive network allows us to effectively serve customers in both urban and rural areas, ensuring accessibility and convenience. 4. Customer Acquisition and Retention Strategies Their approach to customer acquisition is a hybrid model that combines direct and indirect channels. They source direct business through strategic partnerships with developers, self-sourcing by engaging with customers, and leveraging leads from the digital ecosystem. 5. Competitive Landscape The housing finance industry in India is highly competitive, with numerous players vying for market share. Their primary competitors include well-established Housing Finance Companies (HFCs), Non-Banking Financial Companies (NBFCs), and scheduled commercial banks. Their competitors include LIC Housing Finance Limited, PNB Housing Finance Limited, Can Fin Homes Limited, Tata Capital Housing Finance Limited, Aadhar Housing Finance Limited, Aavas Financiers Limited, Aptus Value Housing Finance India Limited, and Home First Finance Company India. 6. The Revenue has Increased from Rs.3767 Crores in FY22 to Rs.7617 Crores in FY24. 7. The EBITDA has Increased from 3141 Crores in FY22 to 6894 Crores in FY24. 8. The PAT has Increased from 710 Crores in FY22 to 1731 Crores in FY24. 9. As per FY24, CFO/EBITDA is 0.29, and EPS is 2.07, 10. Market Capitalization is 58,297 Crores and P/E is 33.7x based on FY24.

Lead Manager of Bajaj Housing Finance Limited IPO:

  1. Axis Capital Limited
  2. BofA Securities India Limited
  3. Goldman Sachs (India) Securities Private Limited
  4. IIFL Securities Ltd
  5. JM Financial Consultants Private Limited
  6. Kotak Mahindra Capital Company Limited
  7. SBI Capital Markets Limited

Registrar of Bajaj Housing Finance Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Bajaj Housing Finance Limited Bajaj Auto Limited Complex, Mumbai-Pune Road, Akurdi, Pune - 411035 Phone: +91 20 7187806 Email: bhflinvestor.service@bajajfinserv.in Website: https://www.bajajhousingfinance.in/

Discussion on Bajaj Housing Finance Limited IPO:

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