UBS issues ‘sell’ tag on Bajaj Finance before housing unit board meet over listing

A day before the board meet of Bajaj Housing Finance on listing plans, global brokerage firm UBS has shared a ‘sell’ call on Bajaj Finance, saying that the listing of its housing finance arm would not add any considerable value. UBS analysts shared a target price of Rs 6,800 per share for Bajaj Finance, implying a 6 percent downside from current level.

The stock of this NBFC giant surged over 7 percent in the past one month, outperforming 1 percent gain in the benchmark Nifty 50 index.

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Bajaj Finance’s wholly owned subsidiary Bajaj Housing Finance is planning to launch its big-bang initial public offer within the next 12-18 months, Moneycontrol had reported earlier.

Also read | Bajaj Finance arm Bajaj Housing Finance picks Kotak, Axis, BofA, JM Fin and SBI Caps for mega IPO

Bajaj Housing Finance has picked 5 investment banks as advisors to the home financier – Kotak Mahindra Capital, Axis Capital, BofA Securities, JM Financial and SBI Capital have been shortlisted for this IPO, reports suggested.

However, analysts at UBS feel that the listing of Bajaj Housing Finance may not add any considerable value as their business profile looks weaker on a standalone basis. “If investors look at Bajaj Housing Finance on a standalone basis, they would believe that their business profile is weak. We expect a holding company discount too for the company’s market price,” they added.

Based in Pune, Bajaj Housing Finance offers finance to individuals as well as corporate entities for purchase and renovation of homes or commercial spaces. It also provides loans against property for business or personal needs as well as working capital for business expansion purposes.

For the nine months ended December 31, Bajaj Housing Finance’s disbursements rose by 31 percent to Rs 25,308 crore, while net profit increased by 41 percent to Rs 1,350 crore.

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