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Photo: Facebook/@Bajaj Housing Finance Limited
Bajaj Housing Finance’s shares saw significant pressure today as they were down 2% after hitting a fresh high of Rs 188.45 at around 10 am on the BSE, following a spectacular launch on stock exchanges this Monday.
However, fortunate IPO investors who received shares through a lottery mechanism are currently enjoying huge profits of more than 150%. Bajaj Housing shares are still rising despite worries that the stock is overvalued since investors who were unlucky enough to miss out on an allocation in the initial public offering are now chasing the stock at higher prices.
The entire number of free float shares that are available for trading represents just under 12% of the company’s equity, out of a market capitalization of Rs 1.20 lakh crore.
This explains why the market has floating shares valued at between Rs 14,000 and Rs 15,000 crore. Other than that, I don’t believe it’s on the market. which every fund most likely wishes to invest in the portfolio against,” DRChoksey FinServ Managing Director Deven Chowksey stated.
According to Chowksey, the company is expanding at a compound annual growth rate of about 30%. This indicates that, although if the stock is currently trading at a multiple of seven to 7.5 times price to book value, if one averages the growth over the next three years, the stock is actually worth about 3.5 times.
Therefore, to be quite honest, even at 3.5 times price to book value three years from now, this company may seem a little bit more pricey when compared to others. However, this company guarantees that they are growing at a pace of about 30% compound annual growth, meaning that they will always trade at a premium, given the diversification of the portfolio in the business model, Chowksey continued.
Considering these facts, Deven Chowksey thinks that if the market offers a chance to purchase the stock at a lower price during a fall or a dip, that would be a good time to add it to the portfolio. Although it is pricey, he advises purchasing at a slight premium for a high-quality stock.
What keeps this company afloat is its lower base, its enormous database, and, in my opinion, the confidence of investors and the community at large, which it sort of draws from, among other things. As I said, these are more qualitative parameters,” said Devang Mehta of Spark Private Wealth.
Mehta stressed that while a number of companies that have floated in the last seven to ten months, like Ola Electric, have sort of again outperformed expectations, now is not the time to make any firm decisions.
Mehta continued, “This is a great company, good company; it is a hold for somebody who has sort of bought allotment and somebody who wants to buy.”
The general recommendation for investors is still to hold off on buying shares until after a small downturn.