Bajaj Housing Finance Shares Plummet to Record Low as Promoter Sells Stake Worth Rs 1,580 Crore
The shares of Bajaj Housing Finance Ltd. fell over 9% on Tuesday to hit a record low as promoter Bajaj Finance will offload a 2% stake to comply with the requirements of minimum public shareholding.
Reasons Behind the Stake Sale
According to SEBI rules, listed companies must have at least 25% public float to ensure market integrity and liquidity. Companies with a post-issue market capitalisation (market cap) between Rs 50,000 crore and Rs 1 lakh crore have up to five years to meet the 25% MPS, and those with a market cap over Rs 1 lakh crore can have up to ten years.
Details of the Stake Sale
According to Bloomberg, 2.5% equity of the company changed hands through 21 bunches on Tuesday. The floor price for the block deal is Rs 95 per share, a 9.6% discount to the previous close, as per a termsheet accessed by NDTV Profit. The deal value aggregates to Rs 1,580 crore.
The promoter stake aggregates to 88.7% of the total paid-up capital of the company as on date. “Out of the total share capital held, the seller proposes to divest up to 2% of its equity share capital of the Company not exceeding in aggregate up to 166,600,000 shares in one or more tranches,” an exchange filing said on Monday.
Impact on Share Price
The scrip fell as much as 9.08% to Rs 95 apiece on Tuesday, the lowest since its listing last year. It pared gains to trade 8.82% lower at Rs 95.27 apiece, as of 9:35 a.m. This compares to a 0.23% decline in the NSE Nifty 50 Index.
It has fallen 28.67% in the last 12 months and 24.59% year-to-date. Total traded volume so far in the day stood at 3.47 times its 30-day average. The relative strength index was at 34.50.
Analyst Ratings and Price Targets
Out of 11 analysts tracking the company, two maintain a ‘buy’ rating, three recommend a ‘hold,’ and six suggest ‘sell,’ according to Bloomberg data. The average 12-month consensus price target of Rs 111.10 implies an upside of 16.6%.
Lock-in Period for Remaining Promoter Equity
The remaining promoter equity will be locked-in for 60 days.
Merchant Banker to the Deal
IIFL Capital Services Ltd. is the sole merchant banker to the deal.
Conclusion
In conclusion, the stake sale by Bajaj Finance has led to a significant decline in the share price of Bajaj Housing Finance. However, the company’s fundamentals remain strong, and the average 12-month consensus price target implies an upside of 16.6%. Investors should keep a close eye on the company’s performance and any further developments related to the stake sale.
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