IPO listed on 15 May'24
Aadhar Housing Finance Ltd
Minimum Investment
₹ 14,805 / 47 shares
Grey market premium
₹ 70 (22% premium)
Issue price
₹ 315
Listing price
₹ 315
% since launch
Listing on
May 15, 2024
Our Verdict:
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- Aadhar Housing Finance Ltd (AHFL) is the largest player in the affordable housing finance sector, managing assets worth Rs 19,900 crore as of December 2023. Despite fierce competition, the firm has not only expanded its loan book but maintained healthy asset quality and strong return ratios.
- From a valuation standpoint, the IPO appears attractively priced with a Price-to-Earnings (P/E) multiple of 18.4x, calculated against projected FY24 earnings post-IPO. This valuation is lower than many of its listed competitors, offering potential upside for investors.
- Backed by marquee promoters (Blackstone Group) and led by a professional team with a robust balance sheet, AHFL is positioned to thrive in the affordable housing finance market. Given the firm’s promising growth trajectory and reasonable valuation, investors may consider subscribing to the IPO from a long-term perspective.
About the company
Founded in
26 Nov'90
Managing director
Rishi Anand
- AHFL specializes in the low-income housing finance sector, offering loans predominantly under Rs 15 lakh. As of December 2023, the average loan size was Rs 10 lakh with a loan-to-value ratio of 58.3%.
- AHFL operates a widespread network comprising 487 branches and 109 sales offices across 20 states and union territories. By the end of December 2023, its services were accessible in 10,926 pin codes throughout India.
- AHFL provides a variety of mortgage-related financial products, including financing for the purchase and construction of residential properties, home improvement and extension, and the construction and acquisition of commercial properties.
STRENGTHS
- Strong Market Presence: AHFL boasts the broadest presence among its peers with operations across 20 states and union territories as of March 2023, leading in geographic coverage. By December 2023, the company had the second-largest workforce in the industry, totaling 3,885 employees and maintained the highest number of active accounts at 233,000 as of March 2023.
- Diversified Branch Network: AHFL’s branch network is well-distributed, with no single state contributing more than 14% to the gross AuM. The two largest states combined accounted for 27.6% of the gross AuM by the end of December 2023. This extensive network of branches and sales offices is crucial for continued growth and maintaining a leadership stance in the market.
- Robust Financial Performance: AHFL has shown steady financial growth with a net profit Compound Annual Growth Rate (CAGR) of 29% from FY21 to FY23, excluding exceptional items.
- Sustained Growth in Assets and Disbursements: AHFL has seen a consistent increase in Assets under Management (AuM) with a CAGR of 14% from FY21 to FY23. Disbursements have also risen significantly at a CAGR of 29% during the same period.
- Strong Return Metrics: AHFL recorded a healthy Return on Equity (ROE) of 16.5% in FY23, alongside an enhancement in Return on Assets (ROA) from 2.6% in FY21 to 3.6% in FY23. These metrics further improved in the first nine months of FY24, reaching an ROA of 4.2% and an ROE of 18.4%.
RISK FACTORS
- Dependence on Vulnerable Demographic Segments: AHFL primarily serves economically weaker and low-to-middle income groups, who are more susceptible to natural disasters, calamities, and fluctuations in macroeconomic conditions. These segments constitute 72.9% of the company's gross AUM and 85.5% of its live accounts, highlighting a significant exposure.
- Reliance on Third-Party Selling Agents: AHFL is dependent on third-party selling agents for 66.5% of its new customer referrals as of 9MFY2024. These agents are not exclusive to AHFL, which may pose a risk to customer acquisition consistency and quality.
Issue details
Issue type
Mainstream
Issue size
₹ 3,000 crore
Fresh Issue
₹ 1,000 crore
OFS
₹ 2,000 crore
Price range
₹ 300 - 315
Lot size
47 shares
Issue Objective
The net proceeds from the fresh issue are intended to be utilised towards:
- To meet future capital requirements towards onward lending; and
- General corporate purposes.
Dates
Bidding open
8 May'24
Bidding close
10 May'24
Allotment date
13 May'24
Refund date
14 May'24
Listing
15 May'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2024 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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