Missed the Bajaj Housing multibagger bus in IPO? Here's what you can do now

While getting richer, in the long run, may be a matter of skill and temperament, making money via an IPO is purely a matter of luck as applicants are chosen through a lottery system. The multibagger listing of much-hyped Bajaj Housing Finance IPO has sparked a FOMO as the stock not only listed at a hefty premium of 114% but went up another 9% post-listing.

Valued at Rs 1.36 lakh crore now, Bajaj Housing shares now command a price-to-book (P/B) multiple of 6x which analysts say leaves little scope for higher upside potential and therefore unlucky allottees in the IPO should avoid chasing the stock at higher valuations.

"Apart from the rate of loan and quality of service, housing finance is a commoditized business. So I would rather buy the other housing companies - PNB Housing, LIC Housing - rather than try to buy now. If you are lucky enough to have gotten the IPO, then I would be a seller on listing," said Dalal Street veteran investor Chakri Lokapriya.

By garnering the highest-ever bids worth Rs 3.2 lakh crore, the Rs 6,560 crore IPO was subscribed 63.61 times with about 89 lakh investors waiting in the queue.

"Post listing, we recommend conservative investors to choose profit booking, as listing gain is over and above our expectations, while long-term investors can continue holding for long-term growth as the sector outlook remains very optimistic given the company's well-positioned business model. We believe housing as a sector will continue to deliver and perform well in the next 3-4 years and Bajaj Housing can tap the opportunity to lead the sector," Prashanth Tapse of Mehta Equities said.

At Rs 70 per share, Bajaj Finance shares were valued at 3x P/BV, and post listing the valuations stretched to 6x P/BV which is the highest in the space, he said.

Shivani Nyati, Head of Wealth, Swastika Investmart, said investors who were fortunate enough to secure allotments in the IPO may consider booking profit now, but those who want to hold their positions may do so by potentially setting a stop loss at Rs 135 as a risk management strategy.

However, it's essential to continuously monitor the company's performance and market conditions for informed decision-making, she said.

DRChoksey FinServ's managing director Deven Choksey said investors willing to hold the stock for 10 years "will be most wealthy". Stoxbox's Prathamesh Masdekar, has also advised investors to keep the stock for the medium-to-long term.

Also read | Multibagger on Listing! Bajaj Housing Finance shares list at 114% premium over IPO price

Most housing finance companies are trading at an estimated P/B ratio of 1-2.5 times. "This gives it the highest valuation among peers, and a 25% premium from the next company in line which is Home First Finance Company," said Narendra Solanki of Anand Rathi.

The Bajaj Housing Finance IPO is also expected to bring the focus on other listed NBFCs, especially in the housing finance space.

"We see that this IPO may lead to a re-rating of private NBFCs in the markets, which have grown at 15-20% in the past three years, but the stocks have not performed much," said Krishna Appala of Capitalmind Research.
Even parent Bajaj Finance grew at 25-26% CAGR for the past three years, and has given sublime returns, the analyst said.