Bajaj Housing IPO sees record-breaking demand, garners 9 mn applications

Public offer gets subscribed over 67x, cumulative bids exceed Rs 3.24 trillion

Bajaj Housing Finance’s maiden share sale witnessed record-breaking investor demand, with cumulative bids for the Rs 6,560-crore offering exceeding Rs 3.2 trillion. The initial public offering (IPO) also attracted almost 9 million applications, surpassing the previous record held by Tata Technologies of 7.35 million.

The remarkable response has set a new benchmark for the Indian IPO market and cemented the Bajaj group's legacy as a creator of exceptional shareholder value through domestic financial powerhouses Bajaj Finance and Bajaj Finserv.

Market experts believe this achievement underscores the robustness and depth of the $5.5 trillion domestic equities market, showcasing its ability to support large-scale share sales.

This milestone comes on the heels of two highly anticipated IPOs of global auto major Hyundai's India, which is expected to raise Rs 25,000 crore, and SoftBank-backed Swiggy, whose issue size is pegged at over Rs 10,000 crore.

Bajaj Housing’s IPO saw robust demand across the investor segment, with overall demand exceeding 67 times the shares on offer. The institutional investor portion of the issue was subscribed a staggering 222 times, while high net worth individual portions of up to Rs 10 lakh and more than Rs 10 lakh saw subscription of 51 times and 31 times, respectively. Bids from individual investors exceeded Rs 60,000 crore.

The frenzy surrounding Bajaj Housing Finance echoed the enthusiasm seen during Tata Technologies' debut in November 2023, which marked the Tata Group's first public offering in nearly two decades. The issue had garnered bids worth more than Rs 2 trillion, and Tata Technologies' shares had surged 2.65 times on debut. Similarly, shares of Bajaj Housing – referred to as the 'HDFC of the future'—are expected to more than double on their trading debut on Monday. This could value the company at a staggering Rs 1.2 trillion, making it India's most valuable non-deposit-taking housing finance company (HFC). Currently, the spot is occupied by LIC Housing Finance, valued at Rs 37,151 crore.

At the upper end of the price band of Rs 66-70, Bajaj Housing – fully owned by Bajaj Finance – is valued at Rs 58,000 crore.

The high valuations, however, have raised concerns among analysts.

In a research note, Suresh Ganapathy, MD and Head of Financial Services Research at Macquarie, observed that at the upper end of the valuation spectrum, Bajaj Housing Finance is priced at 2.6 times its estimated book value for FY26 on a post-dilution basis for a 2.5 per cent return on assets. Additionally, the note highlighted that the company's return on equity is expected to decline from 15 per cent to 12 per cent following the IPO, which raised Rs 3,560 crore in fresh capital. For context, the erstwhile HFC behemoth HDFC at its peak was valued at almost 4 times book value.