Despite geopolitical tensions and looming elections, Indian stock market continue to outperform major global indices.
This momentum is expected to carry over into the primary market in May, with a flurry of IPO launches and listings raising a total of Rs 70 billion (bn).
This year marks a significant departure from the past two decades, where the Indian primary market typically stagnated before elections.
The amount raised through IPOs in the six months leading up to the 2024 election cycle has already surpassed the combined total of the previous four election periods by a factor of seven.
Among the highly anticipated offerings in May, one of the most awaited IPOs of 2024, Aadhar Housing Finance is set to make its debut.
Specialising in mortgage-related loan products, Aadhar Housing Finance provides various options, including loans for purchasing and constructing residential properties, home improvement and extension loans, and loans for commercial property construction and acquisition.
The company operates as a housing finance company (HFC) with a focus on the low-income housing segment.
Its clientele primarily consists of economically weaker and low-to-middle-income individuals in need of small-ticket mortgage loans.
As of 30 September 2023, the company possesses a network comprising 471 branches, among which 91 serve as sales offices.
The average loan size is around Rs 1 million (m) with a loan-to-value ratio of approximately 58%, showcasing a targeted approach to addressing the needs of its primary customer segment.
Post-acquisition, Blackstone invested Rs 13 bn more into the company.
Being owned by an affiliate of Blackstone group, a leading global investment firm, provides Aadhar with valuable resources and expertise.
Blackstone's investment and industry connections gives the company an edge in the market.
The company's overall growth, portfolio performance, asset quality and continued profitability during these periods demonstrate the strength of the business.
This, coupled with competitive borrowing costs and a stable funding base from diverse sources, including banks and mutual funds, enhances the company's financial stability and growth prospects.
These factors collectively make Aadhar Housing Finance a distinctive IPO with an established foothold.
Here are the key details of the IPO...
Issue period: 8 May 2024 to 10 May 2024
Type of issue: Book Built Issue
Price band: Rs 30 to Rs 32 per share
Face value: Rs 10 per equity share
Lot size: 47 shares
Application limit: Maximum thirteen lots for retail investors. Retail investors can make an application for a minimum of one lot for Rs 14,805 and their maximum investment would be 13 lots for Rs 192,465.
Tentative IPO allotment date: 13 May 2023
Tentative listing date: 15 May 2023.
The housing finance company has fixed a price band of Rs 300-315 per share for its initial share sale of Rs 30 bn.
The company has demonstrated revenue growth of 9.1% on a compounded annual growth rate (CAGR) basis over the period spanning from the financial years 2021 to 2023.
This performance can be credited to the growing customer base and a continuous growing demand.
While there was a good increase in revenue, the net profit of the company also increased from Rs 3 billion (bn) in March 2021 to Rs 5.5 bn in March 2023.
The housing finance company's gross assets under management (AUM) stood at Rs 198.7 bn at the end of December FY24, higher by 20% over the same period last year.
The company's net interest income for the year surged 28.6% to Rs 12.4 bn as against the previous year, with net interest margin (NIM) expansion of 1.1% at 8% during the same period.
Particulars | 31-Mar-21 | 31-Mar-22 | 31-Mar-23 |
---|---|---|---|
Revenues (Rs in bn) | 15.7 | 17.3 | 20.4 |
Revenue Growth (%) | - | 10.1 | 17.9 |
Net Profit (Rs in bn) | 3.4 | 4.5 | 5.5 |
Net Worth (Rs in bn) | 26.9 | 31.5 | 36.9 |
Its net profit for the nine months ended December FY24 climbed 35.6% to Rs 5.5 bn, compared to the same period last year.
Net interest income rose nearly 30% during the same period to Rs 11.4 bn, with NIM at 9%.
Looking ahead, the company has plans to extend distribution network to achieve deeper penetration in key states.
As per the company's red herring prospectus, these are the industry peers of Aadhar Housing Finance.
Company | Total Revenue (Rs in billion) | EPS (Basic) (in Rs) | Return on Net Worth (%) |
---|---|---|---|
Aadhar Housing Finance | 20.4 | 13.8 | 16.5 |
Aptus Value Housing Finance | 10.9 | 10.1 | 16.1 |
Aavas Financiers | 16.1 | 54.4 | 14.1 |
Home First Finance Company | 7.9 | 26 | 13.5 |
India Shelter Finance Corporation | 5.9 | 17.8 | 13.4 |
Aadhar Housing Finance has the highest total revenue among the companies listed, indicating a large customer base and loan portfolio.
Aadhar Housing Finance has a competitive return on net worth, suggesting it's efficient at generating profits from shareholders' equity.
Aadhar Housing Finance is committed to its strategy of targeting customers and expanding its customer base while simultaneously investing in and deploying digital and technology-driven solutions.
The Indian home mortgage finance market is poised for remarkable growth, projected to be at a robust 13% compound annual growth rate (CAGR) from FY23 to FY26.
This growth is driven by increasing incomes, improved affordability, and substantial government support.
As the industry continues to evolve and expand, it is expected to play a crucial role in addressing the housing needs of millions and contributing to the overall growth and development of the nation.
Consequently, the forthcoming quarters are anticipated to yield favourable outcomes for housing finance companies (HFCs) and non-banking financial companies (NBFCs).
For more information on IPOs, check out the list of upcoming IPOs.
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