Bajaj Finance's housing finance arm announces IPO; to raise ₹4,000 cr via fresh issue

To comply with the Reserve Bank of India (RBI) norms, the board of Bajaj Finance Ltd has announced an initial public offer (IPO) of its subsidiary Bajaj Housing Finance Ltd. The IPO will comprise a fresh issue of equity shares of up to ₹4,000 crore plus an offer for sale of equity shares, the company informs via an exchange filing. The details about offer-for-sale component is likley to be announced in the days to come.

"The board of directors of the company at its meeting held today, i.e. 6 June 2024 has approved an initial public offering of equity shares of ₹10 each of the company, which comprises of fresh issue of equity shares aggregating up to ₹4,000 crore; and an offer for sale (‘OFS’) of equity shares, subject to market conditions, receipt of applicable approvals, regulatory clearances and other considerations," the Bajaj Finance filing says.

Shares of Bajaj Finance opened a 1.75% gap-up today and hit the day's high of ₹7,070 on the BSE. At the current share price, the scrip is trading 13.9% lower than the 52-week high of ₹8,190 touched on October 6, 2023, and the company's m-cap stands at ₹4.36 lakh crore. Bajaj Finance's share has dipped 3.31% in the year-to-date period, while the scrip has dipped 4.55% in the past six months. The stock has seen a 2.71% surge in the past month and 2.39% in the past week.

Bajaj Housing Finance, a 100% subsidiary of Bajaj Finance, is a diversified NBFC and claims to cater to more than 83.64 million customers across the country.

Headquartered in Pune, Bajaj Housing Finance offers finance to individuals as well as corporate entities for the purchase and renovation of homes, or commercial spaces. It also provides loans against property for business or personal needs as well as working capital for business expansion purposes.

The company also offers finance to developers engaged in the construction of residential and commercial properties as well as lease rental discounting to developers and high-net-worth individuals.

Bajaj Housing Finance claims to have the "highest credit ratings" from CRISIL as well as India Ratings. "The company is rated AAA/stable for its long-term debt programme and A1+ for its short-term debt programme from CRISIL and India Ratings," the company says.

The parent company and NBFC major Bajaj Finance reported a healthy business in the January-March 2024 quarter of 2023-24. The company recorded a 21% year-on-year increase in consolidated net profit in Q4 FY24 at ₹3,825 crore. The net interest income (NII) increased 28% YoY to ₹8,013 crore. The number of new loans booked grew by 4% in Q4 FY24 to 7.87 million against 7.56 million in Q4 FY23, though Bajaj Finance said the number was lower by 0.80 million in the wake of the recent RBI curbs.

Notably, in November 2023, the RBI had ordered Bajaj Finance to stop sanction and disbursal of loans under its two lending products namely, ‘eCOM’ and ‘Insta EMI Card’. The action was taken due to “non-issuance of key fact statements to the borrowers under these two lending products and the deficiencies in the key fact statements issued in respect of other digital loans sanctioned by the company”. The ban was lifted on May 2, 2024.