Macquarie analysts believe that a strong listing (with a 50 percent premium) of Bajaj Housing Finance could drive a 5 percent upside for its parent company, Bajaj Finance. They also suggest that this could lead to a re-rating of other housing finance companies.
"Currently, the grey market premium indicates a price of around Rs 56, suggesting a 50 percent listing premium based on the sum-of-the-parts valuation. This could result in an additional 5 percent upside for Bajaj Finance from current levels," they noted.
Despite this potential upside, the brokerage has maintained an 'underperform' rating for Bajaj Finance, with a target price of Rs 6,300 per share—lower than the current market price, implying a potential downside of 14 percent. This lower target is driven by expectations of a decline in return on equity (RoE) due to equity dilution in Bajaj Housing Finance, which is set to launch its IPO on September 9.
"We expect RoE to decrease from the current 15 percent to 12 percent as a result of the fresh capital raised through the IPO," the firm added.
ALSO READ: Bajaj Housing Finance sets price band of Rs 66-70 a share for its IPO
Furthermore, analysts questioned whether Bajaj Housing Finance has the potential to become as significant as the former HDFC Ltd. Post-IPO, Bajaj Housing Finance's valuation is anticipated to be 2.6 times its projected book value for the fiscal year 2026.
Bajaj Housing Finance, set to open its IPO on September 9, has established a price band of Rs 66-70 per share. The issue includes a fresh issue of up to Rs 3,560 crore and an offer for sale of up to Rs 3,000 crore by Bajaj Finance. At the upper price band, the total market capitalisation of the firm will be approximately Rs 58,300 crore.
The anchor bidding will commence on September 6, with the issue closing on September 11. This move by Bajaj Housing Finance aligns with the RBI's mandatory requirement for "upper layer" NBFCs to list within three years of being notified, by September 2025.
Bajaj Housing Finance, a diversified NBFC based in Pune, serves over 76.5 million customers nationwide, providing financing to both individuals and corporate entities for the purchase and renovation of homes or commercial spaces.
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