The Blackstone Group-backed Aadhar Housing Finance raised Rs 897.9 crore from anchor investors as it finalised allocation of 2,85,04,761 equity shares at Rs 315 per share.
Incorporated in 2010, Aadhar Housing Finance is a housing finance company targeting the lower income segment.
The initial public offering (IPO) of Aadhar Housing Finance opens for bidding on Wednesday, May 8, 2024. The housing finance player is offering its shares in the range of Rs 300-315 apiece, where investors can make bids for a minimum of 47 equity shares and its multiples thereafter. The issue will close for bidding on Friday, May 10.
Incorporated in 2010, Aadhar Housing Finance is a housing finance company targeting the lower income segment. The deep impact branches’ sales offices aim to serve customers in India’s tier 4 and tier 5 towns. It provides a variety of mortgage loan products for residential and commercial property purchase and construction, home improvement and extension.
The Rs 3,000 crore IPO of Aadhar Housing Finance includes a fresh share sale of Rs 1,000 crore and an offer-for-sale (OFS) of up to Rs 2,000 crore by its promoter BCP Topco VII. The company proposes to utilize the net proceeds from the fresh issue to meet future capital requirements towards onward lending; and general corporate purposes.
Ahead of its IPO, the Blackstone Group-backed Aadhar Housing Finance raised Rs 897.9 crore from anchor investors as it finalised allocation of 2,85,04,761 equity shares at Rs 315 per share. Marquee names including Morgan Stanley, Stichting Depository APG, WF Asian Reconnaissance Fund, Clarus Capital, Neuberger Berman, CLSA Global, East Bridge Capital and others participated in the anchor book.
Aadhar Housing had a vast network of 471 branches, including 91 sales offices, as of September 30, 2023. These branches and sales offices are spread across 20 states and union territories, and they operate in around 10,926 pin codes throughout India. It also enrolled 12,221 Aadhar Mitras who get referral fees for sourcing customers’ loans.
The company, in consultation with managers of the issue has reserved shares worth Rs 7 crore for the eligible employees of the company, who will get a discount of Rs 23 apiece during the bidding. Of the net offer, 50 per cent shares are reserved for qualified institutional bidders, while non-institutional and retail investors will get 15 per cent and 35 per cent of the net offer.
Aadhar Housing Finance reported a net profit of Rs 547.88 crore with a revenue of Rs 1,895.17 crore for the nine months ended on March 31, 2023. The company’s bottomline came in at Rs 545.34 crore with a revenue of Rs 2,043.52 crore for the entire financial year ending on March 31, 2023.
ICICI Securities, Citigroup Global Markets India, Kotak Mahindra Capital, Nomura Financial Advisory and SBI Capital Markets are the book running lead managers of the Aadhar Housing Finance IPO, while Kfin Technologies is the registrar. Shares of the company shall be listed on both NSE and BSE on May 15. Here’s what a host of brokerage say about the IPO of Aadhar Housing:
Anand Rathi Research
Rating: Subscribe
Aadhar Housing is a HFC focused on the low-income housing segment in India with the highest AUM and net worth among their analyzed peers with a Seasoned business model with strong resilience through business cycles and robust, comprehensive systems and processes for underwriting, collections and monitoring asset quality, said Anand Rathi Research, with a ‘subscribe’ tag.
Nirmal Bang Securities
Rating: Subscribe
Upon comparing Aadhar with peers, we observe its loan book is the highest at 19,865 crore, while its growth is the lowest. In the affordable housing finance sector (low & mid income groups), we’ve observed in the past that companies with larger loan books tend to experience slower growth once they cross the Rs 15,000 crore mark, said Nirmal Bang Securities.
“Aadhar is in the range with its peers such as spreads, cost/income, return ratios and asset quality. Thus on the back of a comparatively larger base and lower growth profile, we believe Aadhar deserves to trade at some minor discount to peer averages. This leaves some modest scope for listing gains and thus we recommend subscribing to the issue,” it said.
Aditya Birla Capital
Rating: Subscribe
Aadhar Housing is available at a P/BV of 2.9 times its FY24 annualised BV which is reasonable when compared to peers. We believe that Blackstone’s resources, relationships, and expertise and market leader in the low-income housing segment in India can create a huge opportunity going forward, said Aditya Birla Capital with a ‘subscribe’ recommendation on the issue.
Swastika Investmart
Rating: May Subscribe
Aadhar Housing Finance is a leading HFC with the highest AUM in its low-income segment. The company boasts a robust and extensive branch network, efficient systems, and access to diversified, cost-effective long-term financing. Its strong financial performance reflects consistent growth over the years, said Swastika Investmart in its IPO note.
“However, some key challenges require careful consideration. Aadhar faces inherent risks associated with the creditworthiness of its low-income clientele and increases in NPAs. It operates in a highly competitive industry and is susceptible to interest rate volatility. Therefore, we recommend this IPO only for high-risk investors seeking long-term exposure to the sector,” it said.
StoxBox
Rating: Subscribe
StoxBox expects operational performance to improve, led by the dominant low-income housing segment, low cost of borrowing, and higher return ratio among peers. “The issue is valued at 3.1 times P/BVPS on FY23 book value, which we feel is fair compared to its peers. We, therefore, recommend a ‘subscribe’ rating for the issue,” it said.
Marwadi Financial Services
Rating: Subscribe
Considering the book value of Rs 5,249.2 crore on a post issue basis, the company is going to list at a P/B of 2.56 times, with a market cap of Rs 13,434.8 crore, whereas its peers namely Aptus Value Housing, Aavas Financiers, Home First Finance, India Shelter Finance are trading at a P/B of 4.65 times, 3.36 times, 4.05 times, 4.59 times, respectively, said Marwadi Financial Services.
“We assign ‘subscribe’ rating to this IPO as the company has a seasoned business model with strong resilience through business cycles and robust processes for underwriting, collections and monitoring asset quality. Also, it is available at reasonable valuation as compared to its peers,” it said.
Systematix Shares and Stocks
Rating: Subscribe
Aadhar Housing has made a healthy RoA and RoE of 3.6 per cent and 16.5 per cent in FY23 and 4.2 per cent and 18.4 per cent in 9MFY24, respectively, said Systematix Shares and Stocks. A seasoned and experienced management team with strong corporate governance enhances confidence, it added with a ‘subscribe’ rating for the issue.
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