PhillipCapital is the first brokerage to initiate coverage on the stock after its listing, signalling an upside of 27% from Mondayβs closing price.
βWe believe BHFL is in a league of its own, with its focus on the βdesirableβ sweet
spot for many home loan (HL) aspirants β a ticket size of Rs 5mn. This addresses 65% of home-loan originations in India. It is increasingly focusing on Lease Rental Discounting (LRD), a high-yield segment that provides operating leverage with scale,β said PhillipCapital in its report.
PhillipCapital also believes that the construction finance (CF) book will be range-bound at 8-10% of its total book and in three years, BHFL is likely to have a balance sheet of more than Rs 2 lakh crore. In the near-term, credit costs will remain benign and this, along with its focus on building a low-risk balance sheet, will lead to RoA/RoE of 2%+/12%+.
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βWith scale, BHFL has scope to improve its expense ratios, implying an improvement in return ratios. Hence, we would look favourably at BHFL for its acute focus on salaried HL, steady expense ratio, and benign credit costs, manifesting strong return ratios,β said Shubhranshu Mishra, Research Analyst at PhillipCapital.
Ahead of the listing, the company’s shares traded with a GMP of 120% to the issue price.
The Rs 6,560 crore IPO of Bajaj Housing Finance was the biggest of the year so far and received a subscription of nearly 67 times the shares on offer.
Later during the session, the stock witnessed some profit booking and was trading 7% higher at Rs 176.47 around 9:30 am.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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