Bajaj Finance’s share price was climbing on Friday as the firm received a go-ahead for the IPO of its housing finance arm.

What Happened: Bajaj Housing Finance said its board has approved an IPO plan, involving raising ₹4,000 crore via a fresh issue and an offer-for-sale component separately. The public issue will include a sale of shares by existing shareholders, stated the Bajaj Finance subsidiary.

The IPO will be subject to market conditions, approvals and regulatory clearances, said the unit of the non-banking finance company (NBFC).

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In September 2022, the Reserve Bank of India (RBI) released a list of upper-layer NBFCs, or those entities with ₹50,000 crore of assets under management. Bajaj Housing Finance, which was part of the RBI list, is required to be listed on stock exchanges by September 2025.

However, UBS believes that the listing of its housing finance subsidiary would not significantly improve its value. The brokerage has set a target price of ₹6,800 per share for Bajaj Finance, indicating a potential 4% decline from current levels.

For the fourth quarter ended March 31, 2024, Bajaj Finance reported a 21.1% year-on-year growth in its net profit at ₹3,824.53 crore. The net interest income (NII) rose 21.1% to ₹3,824.53 crore compared with ₹3,157.8 crore in the corresponding quarter of FY23.

Price Action: Bajaj Finance’s share price was up 2.95% at ₹7,130.10 in early trade on Friday.

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