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00:00and the largest one being Bajaj Housing Finance. Now IPO saw a record subscription and listed at a
00:05150 rupees a piece at a premium of 114 percent over its issue price of 70 rupees per share.
00:13Now after this stellar listing Sanjeev Bajaj spoke to NDTV profit and said that he sees a 12
00:18to 15 credit growth in the housing finance industry and that investors should expect
00:25high quality growth for Bajaj Housing. Here's a slice of that conversation.
00:31We've had very strong growth but this is in the background of a very strong consistently growing
00:37economy and if you look at credit cycles in India we expect steady credit growth at 12 to 15 percent
00:45in the housing industry and on the back of that we are enthused that we can continue to grow
00:51strongly. The economy is showing very strong tailwinds and that's what gives us this comfort.
01:00Shareholders should expect a business that grows with high quality, a high level of corporate
01:06governance that brings the right blend of technology in this particular business and
01:13sustainable sustained growth with high focus on quality of the business and a diversified book
01:21is what we look forward to building. Atul Jain from Bajaj Housing Finance also shared his views
01:26on the potential rate cuts. Now he highlighted that Bajaj Housing Finance would welcome lower
01:31rates as they could enhance their lending capabilities and improve financial conditions.
02:21Let's now focus on a parameter that domestic markets do look closely at and those are
02:32valuations. We're talking about the valuations of Bajaj Housing Finance and joining us is Harsh
02:37Satya. Harsh, let me start off by asking you how do the company's valuations compare with its peers?
02:42Well, first off, Mihika, valuations looking starkly different from where they were today
02:47you were seeing sub three times price to book. You know, at least one year forward when you're
02:52looking at the numbers at the start of trade, of course, at 70 rupees a share, but now that
02:57it's listed at 150 rupees. First off, there's a lot of liquidity, which is around 2.95 lakh crore,
03:05which has been released as a result of all the oversubscription that's happened as part of the
03:12IPO. So, of course, refunds initiated on Friday likely has already hit investor bank accounts.
03:19The impact was already felt on Friday. But now, just with regard to the valuations themselves,
03:26currently, of course, at 165 rupees a piece, all of this starts to look far lower. But currently
03:35at around 150, it was priced, which was at open, it was at 6.1 times price to book at 160. It's
03:43looking even steeper, six and a half times price to book to almost seven times price to book is
03:49where the number for Bajaj housing looks like at listing price, of course, it's at 6.1 times price
03:56to book, which we just spoke about. But let's talk about some of the other housing financiers,
04:01Awas, Aptis, Aadhar, PNB housing, that's how they stack up in the one year forward price to book
04:08multiple. And with regard to overall, you're looking at Bajaj housing having a far more
04:14pacier growth than some of the other names on that list. So it's a little bit of both
04:20profitability as well as growth. Bajaj housing trumps the others. But just in terms of valuations,
04:26it's almost 2x in terms of relative price to book valuations.
04:31Got it, Harsh. And, you know, while we have you with us, could you also tell us the number of
04:36shares that are actually available for trading today and when will more shares be available in
04:40the market? Absolutely, Mehika. So it's all about demand and supply, right? That's what our markets
04:45are about. And to give context, 89% of the shareholding of Bajaj housing still largely
04:53sits with the Bajaj group, which is Bajaj finance alone. And therefore, just about 11% has been
05:00divested as of today, which is post money post the issue of fresh equity. 11.25% was is currently
05:08sitting as in hands of groups outside Bajaj. So currently out of that as well, a large component
05:17is locked in by institutions, anchor book, et cetera. And therefore, the publicly available
05:24shares for trading is just about six and a half odd percent of the total share capital of the
05:30company. So very, very thin in terms of supply out of this as well. Given the kind of commentary
05:36coming, given the kind of bullishness with regard to how analysts are viewing the IPO,
05:42it's very likely that the that at least 50% plus of those owning these shares will likely not be
05:51putting them up for sale either. They'll probably be holding it for the medium to long term.
05:57And as per SEBI data, around 50% of investors sell on listing day, which likely leads less
06:05than 3% in this case, given the kind of traction that we've seen and the kind of commentary coming
06:11from analysts, just about 3% of the shareholding up for sale. And therefore, you likely are seeing
06:18a supply crunch in the market, given the fact that this is how it's playing out. Now, in terms
06:25of what to look for, for additional supply, 12th of October, one and a half percent of the paid up
06:33equity comes on sale because the first anchor book opens, which is roughly a percent and a half of
06:38the cumulative share capital of the company. So that's a large chunk. That's half of what
06:43is available today in terms of supply, which we just computed. On the 11th of December,
06:49another one and a half percent comes on stream. So a full 3% by the 11th of December is available
06:57for anchors as well as other investors to sell. Not sure how much of that will come, but nonetheless,
07:03it will create more supply in the market and that's likely to give further traction in terms
07:11of price action on the stock. Thank you so much, Harsh. This is a key factor that we do have to
07:17look at because you see it in the IPO markets that because of a crunch in supply, you see the
07:22stocks moving up. So it will be key to see what the deliveries of the counter stand for the next
07:26few days. But Harsh also caught up with Jignesh Shail, who is the director of research and head
07:31of the BFSI sector at Incred Capital. Now, he spoke about the bumper listing of Bajaj Housing
07:36Finance. Listen into part of that conversation. Obviously, we have been liking the stock
07:42considering they have done pretty well in the last three years and last three to five years
07:47altogether, Rs. 91,000 crores kind of an AUM. And they have the right mix of AUM and all.
07:55And the ability to grow also quite in a similar kind of a way. Obviously, there have been liking
08:02for such names where there is a pretty strong promoter background along with that the quality
08:08of growth is pretty good and the compounding values, I mean, the growth is also compounding
08:14in nature. Obviously, people are going to like it up. It's a little bit stretched for a while. I
08:18think listing a lot of people are right now in kind of a happy mood right now. Gradually,
08:27we think there could be some consolation or correction is likely. But over a mid to long
08:31term period of time, we continue to like this name. I think they will do quite better just
08:35like the parent. All right, Mr. Jignesh, for a lot of people like us who have not actually
08:42gotten the privilege of getting the IP allotment, do you think it's the right time to buy Bajaj
08:46Housing Finance? I mean, as you guys rightly pointed out, being a housing finance company
08:52with my team's kind of an ROEs and two-person kind of an ROAs, it's a little stretched kind
09:00of a valuation. But as I said, there could be some in the near term, there will be some
09:04consolidation or correction might be possible purely based on valuation. But if somebody is
09:08looking for mid to long term kind of a horizon, I think it's a pretty good story to opt for because
09:13housing finance is a safe asset. The management is very good and growth seems to be in a pretty
09:18good shape at least for now, at least the next couple of years. Got it. Jignesh, let me talk
09:24specifics, you know, growth. Till FY24, the company has clocked an AUM CAGR of 72%, which is
09:35just phenomenal for the kind of base that it has. Continues to do almost 35% AUM growth.
09:43Do you believe a 30% to 35% kind of CAGR over the next three years is something you would pencil in
09:49as an analyst? Yeah, sure. I mean, if you see housing finance,
09:57mortgages is a pretty big market and Bajaj at 21,000 crores still remains a pretty smaller
10:01player out of it. They have a reach, they are able to reach to deeper pockets, deeper geographies
10:07together and they have that kind of networking as well as deep pockets to manage that kind of growth.
10:15So, still doing 30-35% kind of growth at 90-91,000 crores kind of an AUM is still
10:20a pretty much likelihood possibility for somebody who is for next three to five years if somebody is
10:25looking at it. I think doubling the balance sheet is also not something pretty much impossible kind
10:31of a task. It's quite likely that they will be able to manage it up the way how they have a reach
10:36as well as the strong balance sheet. So, essentially, they will double up every two
10:40years because they compound at 35%? I think three, three and a half years is more likely,
10:46but I will be giving it somewhere between 30% kind of a number. So, roughly around three years
10:51is something which is quite likely. Okay, understood. I get your metric. Okay.
10:55And just as they go about doubling, right, so maybe 25% to 30% kind of growth is what you are
11:00ascribing. Maybe if they double in three years likely, what's the kind of operational efficiency
11:07which starts to kick through? Because essentially what's happening is your ROAs have expanded on a
11:12consistent basis. They are on an improving trajectory over the last three to four years.
11:16Do you believe that ROAs can breach the 3% or even 4% mark, which a lot of housing financiers,
11:22at least the smaller ones, more efficient ones are doing?
11:25Rather than purely efficiency, the smaller affordable guys basically has a relatively
11:31better spread or relatively larger spreads. They make it up because they are into a kind of more
11:40into affordable segments or riskier segments altogether. But that, I think, is far more
11:45conservative in that particular space. They have a much more balanced mix with having 56%, 57%
11:51of housing, a bit of a lap, LRDs as well as corporate. I think they will be more aspired
11:57to do a kind of mid-to-premium housing altogether rather than being completely
12:02tented towards affordable. So, maybe margin will be more or less in the similar range what they
12:07used to make it up, will be more similar to large banks or large NBFCs rather than pure
12:13affordable housing finance companies. The operating leverage can still kick in over a period of time
12:17because IGDFC had one of the finest models as far as OPEX was concerned. They used to do cost
12:23to income in the single digits itself. But that is a long way to go. But I think operating leverage
12:28can be a big trigger which can play out over a period of time once the company achieves a kind
12:35of a size. Margin trajectory, I think, should remain more or less similar because they are
12:41quite competitive with large private sector banks and PSB banks like SBI and all. So,
12:45I think in that particular concept, I think margin expansion would be fairly limited. So,
12:51I think from 2 to 0.1, I think aiming to reach towards 2.5 or 3 would be a far more
13:00interesting thing to watch out for. But crossing 2.5 or 3 and reaching to 4, I think that would
13:05be a little difficult task to do at least considering the kind of asset mix they have
13:09right now. Well, here is another view on Bajaj
13:12Finance from Shetha Daptadhar, who is the Vice President of the BFSI segment of Alera Securities.
13:20We certainly believe that this space is here to sustain. And there are two, three reasons if I
13:25could enlist here. One being the deep marketing strategy and penetration, especially in the
13:31non-home loans front. So, be it LRD portfolio, be it developer finance portfolio. So, BHFL is poised
13:38to go deeper markets, tap both internal as well as external sourcing through the enablers,
13:46through connectors, through their digital platforms, which they will be banking upon.
13:51So, there is a lot of scope there for increasing the AUM base right from the sourcing per se.
13:58Second, if you look at the entire entrenchment. So, like I said, a diversified portfolio mix
14:04with a strong presence pan India. So, BHFL today operates out of 20 odd states
14:10in the country with a diversified mix. So, as even Sanjeev Bajaj and Atul pointed out there,
14:16affordable housing finance market as we speak is 11 trillion odd loan market today,
14:22which is another segment which we believe Bajaj Housing Finance can do a lot of work there
14:28given the kind of risk strategy and the kind of inheritance they have in terms of risk management
14:36policies. So, affordable housing finance space is going to be the second biggest trigger
14:42in terms of product diversification for Bajaj Housing Finance. And last but not the least,
14:47the execution. So, look at the team. Atul Jain has been around for a good number of years.
14:54The entire executionary team and the kind of omnipresent strategy, which even I highlighted
14:59earlier, by which they are banking upon the digital platforms, digital sourcing platforms,
15:06and this coupled with physical branch network, which is highly penetrated,
15:11I think that will be the third biggest trigger. So, we certainly believe 25 to 30% AUM cargo
15:17stands eminent for next two to three years for Bajaj Housing Finance.
15:21We also had Vinay J. Singh, who is the MD and Co-Head of Portfolio Management Services at
15:26JM Financial. Now, he said that he is very bullish on Bajaj Housing Finance stock and
15:31take a look on that slice of conversation. Last time you asked me this question about
15:36how much money our mutual funds are sitting with, that number a month ago was about 1.25 lakh crores
15:42to 1.5 lakh crores. It's now at 1.9 lakh crores or about 6% of the overall AUM. So, it's proving to
15:50you if there's a good quality paper, good management, great business strength, you will
15:56start seeing the IPO listing well, and I think that's what's happened. The brand is fantastic,
16:02to say the least. And just on the housing space for a minute, it's very interesting,
16:08if we got one thing positive in this budget, which the government came out in for F2 2024-25,
16:14it was the housing space. Please remember, PMAY or affordable housing has been pushed
16:22pretty much by the government. That is the single most important core area for them. So,
16:26Bajaj Housing may not be fitting into it, but the housing area is growing between 12% to 15% per annum.
16:34Aastha Jan of Hemp Securities and the Adhan offers a word of caution. Now,
16:38those who haven't gotten lucky in the IPO should wait before buying shares.
16:42Listen into that conversation. So, my idea here is not to accumulate at this point because it is
16:49commanding a strong premium. It is currently trading at 159. So, my idea is just those who
16:55didn't get any allotment, they can now buy the shares. Now, it is a secondary market
17:02listed already, we can say. So, they can buy the shares later on when the price comes somewhere
17:08near to 120-125 zone. But here, it is really highly priced because now it is commanding the
17:15price to book multiple of more than 6 times, 5-6 times, which seems to be high. So, accumulation
17:21is right strategy, but not at this point of time. Maybe at 125 or 130 rupees, the stock is well
17:28placed to get more into your portfolio. So, right now, stay away from the stock,
17:34let the stock fall to those level and then make a fresh entry. This is what we are recommending.
17:39Let's now shift our focus to another counter that made its debut on the last sheet today and that is
17:44Cross. Now, it listed at 240 rupees per share on the NSC in line with its issue price. Now,
17:50NGTV Prof. Punit Jhaveri spoke to Cross Management about their exceptional performance in the recent
17:55past. We have had excellent growth in the past 3 years. And of course, the trailer,
18:03axle and suspension segment has been one of the major catalyst for this growth. But nevertheless,
18:11even the component business has also grown over the years, over these past 3 years.
18:19But to take things forward, the trailer segment and trailer segment along with the suspension
18:28is a very fast growing segment in the MNHCV space and we just happen to be in it at the right time.
18:37Going forward, we expect even better growth. This is because of the shift from rigid vehicles to
18:44prime movers, which is being witnessed by the OEMs. It is the fleet owners prefer
18:52a prime mover than having a rigid vehicle. So, this has been one of the growth engines
18:58in the MNHCV segment. And we think that it's going to be there for the next many years more.
19:06Now, before I come back to the trailer segment in detail, I wanted to just
19:11get on the new capex of the company of about 70 crores. Now, that's specifically you mentioned
19:15in a previous conversation for an extrusion plant. Just talk to us the importance of this
19:20capex that you're doing specifically for this because you mentioned that it's not been done
19:24by anyone in the country. What's the special aspect of this particular investment that you've
19:28done or going to do actually from this IPO? So, there is a point where you can competitively
19:39price your product to get better market presence. But beyond that, you need to have technological
19:46drivers and we want to bring in what the world uses for the trailer access, that is an extruded
19:52beam instead of the fabricated beam which is being done currently in India by all the other
19:59players. So, about 30 crores from our proceeds of the IPO will go towards this extrusion plant.
20:08And other than this, there are other areas also which we are investing in, especially for our
20:15export customers to increase our forging capacity, to add a new foundry line. So, all this adds up to
20:23the 70 crores which you just mentioned. But as far as the extrusion plant, yes, we feel it's
20:31going to be a game changer in the trailer axle and suspension segment. So, we'll be
20:38lucky to be the first people to have it with us and it is more cost effective, of course.
20:46And it is stronger, cost effective and lighter in weight. So, it will be a winner. And not only that,
20:55this has been already checked and tested by the Indian industry, by the trailer industry. So,
21:03it will not be difficult to penetrate into the market with this new technology.
21:09The third company that listed today was tyre maker Tollens. Now, my colleague Sajid Mangat
21:14spoke with the management to find out what their plans for the future look like. Do listen to a
21:18piece of that conversation. I would like to wholeheartedly take this platform to express
21:23my gratitude for 55,631 new family members in the form of stakeholders of the company.
21:31And it is our job to ensure that we create wealth for them with our sustained and consistent
21:38performance, the pillars for which is already ready. And there are three pillars I would
21:43probably put as the basic issues with regard to which the businesses will grow, especially in a
21:50tyre industry like ours. The first pillar being the capacity expansion and the install capacity
21:56being put at a level by which three to four years we don't need any capex to take care,
22:01which is what we have taken care of by 2023. The second pillar is going to be the augmenting the
22:07working capital management in time and the successfulness of the IPO will ensure that
22:13we have enough money and resources at our disposal, that the second pillar of working
22:18capital management is beautifully taken care. The third thing would be the technology,
22:23the innovation and the process of cost efficiency that we bring into our operation.
22:28By bringing in two wholly owned subsidiaries, one in India as well as in one in Rasilkema in UAE,
22:34we have ensured that all the three pillars have been kept in place.
22:382024 saw a very huge stride in terms of our revenue as well as in the EBITDA and PAT. I am
22:45extremely confident that with our plans to increase the capacity utilisation and also penetrate newer
22:51markets, we will be keeping pace with the same level of growth in the futuristic years as well.
22:57The opportunity is huge. Post COVID, there has been a huge aggression and demand in
23:02demand in favour of the suppliers and even the cost dynamics of raw material is being passed on,
23:08which is a very good sign. And the positioning that Tallin Ties has taken, I think it's all
23:14augmenting extremely well, both from the employees, companies and the stakeholders' point of view.
23:20Let's now take a look at how Bajaj Housing Finance fares against the other big IPOs.
23:24And we have Rucha joining us to give the key details on that.
23:26Thanks. So starting off with Bajaj Housing Finance, now this one has kicked off today
23:30in the stock market and has listed at around 114% premium. But just quickly giving you a brief
23:35about the issue. The issue price was set at around 66 to 70 per share and the issue size was about
23:406560 crore rupees and this was subscribed at about more than 63 and a half times. But then we'll see
23:46how are the other large IPOs doing. Now we have analysed top five IPOs on the basis of the issue
23:52size and LIC tops the list, which had an issue size of about 21,000 crore rupees, was oversubscribed
23:58about three times. But then we look at the listing gains. Now this one listed at a discount of about
24:059% and had also shared about 35% of its return just within a year. Now this is also followed
24:11by the likes of Paytm, Woodphone, Cold India, Yes Bank and which had issue size of around
24:1620,000 crore rupees is what we can look out over here. But if we can move on to the next slide,
24:21we'll see that the gains with which these have given are not really positive, which would,
24:27make the investors really happy about it. For example, likes of Paytm, which was a 18,300
24:33crore of issue got listed at around 9% discount and shared about 70% returns just within one
24:40year of its listing. So large IPOs as frenzy as it can be, returns are not really what made
24:46investors happy. Talking about Cold India listed at decent premium of about 20% over its issue
24:53price, but again gave around muted return of about 12% within a year. But then if we can move
24:59on, we'll also check the Absolute and the Kegar that is the compounded annual growth rate return,
25:05which these top five IPOs have given well. Absolute return around 19% since its listing.
25:11So this one is the return since its listing and Kegar that is compounded annual growth rate of
25:16about 9%, really not a big number that was expected from a big name like LIC. Again,
25:22Paytm, both returns negative, even Absolute and the Kegar. So these large IPOs were really
25:29hyped around their listing, but not given really good returns, but we'll see
25:33what Bajaj Housing will have to give us within one year of its listing.
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