While Bajaj Housing Finance may have witnessed a bumper listing on the exchanges today, analysts don't expect this momentum to sustain for a prolonged period of time.
The housing finance company's initial public offering worth Rs 6,560 crore witnessed subscription over Rs 3 lakh crore. Shares of the company got listed on the bourses at a jumbo premium of 114% at Rs 150 per share against the issue price of Rs 70 a piece.
"As we look ahead, the business is poised for solid performance driven by robust growth in assets under management and profitability. However, considering the current valuation, there is potential for the stock to underperform in the medium term," Asutosh K Mishra, head of research - institutional equity at Ashika Stock Broking Ltd, said.
"That said, the low float in the market right now may provide support for the current valuation in the short term," Mishra said.
Following the IPO, the parent company Bajaj Finance's stake in Bajaj Housing Finance decreased to 88.75%.
It received Rs 2,999 crore against the share transfer, ceasing Bajaj Housing Finance Ltd. to be a wholly-owned subsidiary of Bajaj Finance Ltd.
Bajaj Finance, which was a wholly-owned subsidiary of Bajaj Finserv Ltd., allotted nearly 51 crore shares to the successful IPO bidders.
As of 1:27 pm, shares of the housing finance company were up by 136% at Rs 164.99 on the BSE.
On the final day, the IPO of the non-banking financial company was subscribed to 63.61 times largely led by institutional investors and followed by retail. The three-day offer entailed a fresh issue of equity shares worth Rs 3,560 crore and an offer for sale worth Rs 3,000 crore from its owner, Bajaj Finance Ltd.
Overall, analysts believe that Bajaj Housing Finance was fairly valued given its significantly higher listing price.
"There is a hype. There is a lot of demand for high quality businesses. I believe the subscription amount and the listing price reflect that. It's just a function of high quality business and growth. There is capital to chase that," another broking analyst said.
Further, analysts also believe that the sentiment of interest rate cuts just being around the corner also played a role in Bajaj Housing Finance's successful IPO.
Going forward, they expect the stock to witness some profit booking in the near term but gain back some momentum.
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