After a stellar debut on the stock exchange earlier this week, Bajaj Housing Finance has seen its stock continue to rise for two successive sessions.
However, the stock encountered a small drop of 2% today, after a new high of ₹188.45 before in the day. Despite the decline, investors who acquired shares through the IPO lottery are sitting on amazing returns of around 150%.
IPO Investors’ Journey and Stock Market Frenzy
For those fortunate enough to be allotted shares during the IPO, the profits have been great. On the other side, unfortunate investors are now stalking the stock, showing to continued buying pressure even at high valuations.
The company’s current market capitalization stands at ₹1.20 lakh crore, but only about 12% of the company’s equity is known for trading in the market. That goes around ₹14,000-₹15,000 crore worth of flowing stock, making it a highly sought-after asset in the portfolios of multiple funds.
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Why Analysts Remain Optimistic Despite High Valuations
Industry experts like Deven Chowksey of DRChoksey FinServ highlight that Bajaj Housing Finance is growing at a compounded annual growth rate (CAGR) of about 30%. While the stock now trades at 7-7.5 times its price-to-book value, when averaged more than 3 years with this growth rate, the valuation comes down to about 3.5 times.
Chowksey notes that although the stock may appear costly now, its constant evolution and diversified portfolio make it possible to trade at a premium in the future.
Chowksey further suggested that investors should look for drops or modifications to buy this stock. Even at a small premium, he thinks it a valuable addition to any portfolio given the company’s long-term prospect.
Support from the Bajaj Group Heritage
Bajaj Housing Finance is buoyed by the reputation of the Bajaj Group, known for building massive capital and keeping high standards of management and corporate virtue. As per some sources, these qualitative factors, mixed with a customer database and strong investor trust- support the company’s growth prospect.
And it is considered that it’s too early to draw final decisions, given the IPO of companies like Ola Electric, which exceeded expectations. However, for investors who received allocations, Bajaj Housing Finance remains a solid grip. Those looking to invest should wait for a slight market change.
Analyst Advice for Investors
While the stock appears costly, analysts stay hopeful about its future, thanks to the strong growth model and trusted reputation of the Bajaj Group. The broader market recommendation depends toward alert for new investors, with advice to wait for a price modification before investing.
Bajaj Housing Finance’s premium valuation might concern some, but its track record of growth and strong market fundamentals suggest that the company is here to stay and succeed.
Disclaimer
The information provided in this article is for educational and informational purposes only. It should not be considered as financial or investment advice. Always conduct your own research or consult with a financial professional before making investment decisions.
