Brokerage firm PhillipCapital has initiated coverage on shares of recently listed Bajaj Housing Finance with a “buy” recommendation and a price target of ₹210, which is 3x of its IPO price of ₹70 per share.

Bajaj Housing Finance became the fourth best listing of 2024, behind BLS E-Services, Premier Energies and Unicommerce e-solutions, when it listed on the bourses on Monday at a 114% premium to its IPO price.

The stock eventually closed at ₹165, a gain of 135% from its IPO price.

PhillipCapital believes that Bajaj Housing Finance is in a “league of its own” with a ticket size of ₹50 lakh being the “sweet spot for many home loan aspirants.”
With that ticket size, Bajaj Housing Finance addresses nearly 65% of all home loan originations in India, PhillipCapital said.

Bajaj Housing Finance’s increased focus on lease rental discounting (LRD), is a positive, as it is a high-yield segment that provides operating leverage with scale.

The brokerage believes that Bajaj Housing Finance is likely to have a balance sheet of ₹2 lakh crore in the next three years, with construction financing remaining rangebound between 8% to 10% of the total book.

In the near-term, PhillipCapital expects credit costs of Bajaj Housing Finance to remain benign and that, along with the focus on building a low-risk balance sheet, will lead to a Return on Assets (RoA) of over 2% and Return on Equity (RoE) of around 12%.

Bajaj Housing Finance was the biggest IPO of the year so far in terms of size and also became the issue which received the highest demand in history. The three-day IPO received bids worth ₹3.24 lakh crore, compared to its IPO size of ₹6,560 crore.

In comparison to its listing day closing price, PhillipCapital’s price target of ₹210 for Bajaj Housing Finance implies a potential upside of 27%.