Bajaj Housing Finance vs PN Gadgil and 2 other IPOs: Which is the smarter bet?

Investors are spoilt for choice as the primary market is flooded with four IPOs (Bajaj Housing Finance, Cross, Tolins Tires and Gadgil National Park), each with the approval of earnings analysts. However, for those limited by funds or looking to prioritize, Bajaj Home Financing stands out as the clear favorite.

Bajaj Housing Finance has emerged as the winner among all IPOs, partly because of its size of Rs 6,560 crore, the largest of all. However, there is an added advantage due to the scale of the IPO: investors may have a better chance of getting an allotment.

However, beyond the allocation, Bajaj Housing Finance enjoys a strong kinship relationship with Bajaj Finance and Bajaj FinservBoth have proven their worth on the stock exchanges with a clean track record and creating long-term value for investors.

The company is also one of the leading private players in the housing finance sector. What makes it particularly attractive is its diversified business model.

“The company is not only focused on mortgage lending but also has a strong presence in segments like LAP (loan against property) and developer financing, which adds to its resilience and growth potential,” said Abhishek Jain, head of research at Arihant Capital.

Read also: Mumbai-based real estate firm Arkade Developers’ IPO is set to open on September 16. See details

Moreover, with a gross NPA (non-performing assets) of just 0.27% and a net NPA of 0.1%, Bajaj Housing Finance has demonstrated strong asset quality, which is crucial for long-term stability and growth. The low NPA levels reflect the company’s prudent risk management, ensuring that its balance sheet remains healthy even during volatile periods.

“Among the options available, Bajaj Housing Finance is probably the safest bet. It offers strong growth prospects, robust financials and a diversified portfolio in the housing finance space, which positions it well to take advantage of future market opportunities,” Jain said.

The edition, which closes on September 11, was a success on the first day, driven by a strong response in all categories.

Prashanth Tapse of Mehta Equities shares the same view that Bajaj Housing looks the most promising among the four IPOs due to its strong business model with high asset quality along with AAA stocks.

“This offer offers investors an opportunity to invest in one of India’s leading players in the housing finance sector. Despite slightly higher valuations, we are bullish on the stock and the sector it operates in,” said Prashanth Tapse, Vice President – Research, Mehta Equities.

Moreover, Bajaj Finance’s GMP looks quite strong at Rs 62, against an upper price band of Rs 70. This indicates a share price gain of over 80% if current trends continue.

If not for Bajaj Housing Finance, the second choice for investors could be the IPO of PN Gadgil Jewellers, which is the second largest player in the organised jewellery market in Maharashtra and enjoys popularity as a well-known brand in fashion jewellery.

“On the valuation front, based on FY24 earnings, the issue appears to be fully priced in the offer at the upper price band. Considering its IPO goals with planned expansion of its presence in Maharashtra and beyond, this provides a case for long-term investors,” Tapse said.

PN Gadgil plans to raise around Rs 1,100 crore through its offer, which is priced at Rs 480 crore at the high end.

The other two IPOs of Kross and Tolins Tyres also received “subscribe” recommendations from analysts, although only cautiously due to their expensive valuations.

The IPO of Kross, a niche and diversified player focused on manufacturing and supplying axle assemblies and suspensions for trailers, comes with the tagline ‘Subscribe at risk’ as the valuation based on FY24 earnings appears to be priced aggressively on near-term triggers.

(Disclaimer:The recommendations, suggestions, views and opinions of the experts are their own and do not represent the views of the Economic Times)