Bajaj Housing Finance Issue: GMP Indicates 73% Upside

Grey Market Premium: an Insight into Bajaj Housing Finance

Bajaj Housing Finance, a subsidiary of Bajaj Finserv, is India's third-largest housing finance company. With a strong focus on the affordable housing segment, Bajaj Housing Finance has witnessed rapid growth in recent years. The company's upcoming issue of secured redeemable non-convertible debentures (NCDs) has garnered significant attention in the market. The grey market premium (GMP) for Bajaj Housing Finance NCDs is an indicator of strong investor demand for this issue and suggests a potential upside of 73%.

Understanding Grey Market Premium

Grey market premium is the difference between the subscription price of an NCD and its expected trading price in the secondary market. It is an indicator of the demand for the upcoming issue, with a higher GMP signaling higher demand. The GMP for Bajaj Housing Finance NCDs currently stands at 110, indicating that the NCDs are likely to trade at a premium of Rs. 110 to Rs. 120 above their issue price in the secondary market.

Factors Driving Strong Demand

Several factors are contributing to the strong demand for Bajaj Housing Finance NCDs: * **Strong financial performance:** Bajaj Housing Finance has consistently delivered strong financial performance, with a healthy loan book and low delinquency rates. * **Affordable housing focus:** The company's focus on the affordable housing segment is a key factor driving demand, given the rising demand for housing in this segment. * **Experienced management:** The company is led by an experienced management team with a proven track record in the housing finance industry. * **Attractive interest rates:** The NCDs offer attractive interest rates, making them a compelling investment option for retail investors.

Key Details of the Issue

* Issue opens: June 27, 2023 * Issue closes: July 11, 2023 * Base issue size: Rs. 1,000 crore * Green shoe option: Rs. 250 crore * Credit rating: CRISIL AAA/Stable, ICRA AAA/Stable * Interest rate options: 7.60% - 7.85% * Tenure options: 36 months, 60 months, 84 months

Benefits of Investing in Bajaj Housing Finance NCDs

* **Fixed income with attractive returns:** NCDs offer fixed income with attractive interest rates, providing a stable source of income for investors. * **Diversification of portfolio:** NCDs can diversify an investment portfolio and reduce overall risk profile. * **Tax benefits:** Interest earned on NCDs issued by listed companies, like Bajaj Housing Finance, is eligible for deduction under Section 40(a)(iia) of the Income Tax Act. * **Capital appreciation potential:** NCDs with attractive GMP, like Bajaj Housing Finance NCDs, have the potential for capital appreciation in the secondary market.