 "IPO")
Aadhar Housing Finance made a flattish stock market debut on Wednesday with its shares of housing finance company (HFC) getting listed at Rs 315 per share, a 0.22 per cent discount over its issue price of Rs 315 per share.
However, after listing the stock of the company moved up to 4.7 per cent at Rs 329 a piece in intraday deals on the BSE.
The IPO received an overall subscription of 26.76 times. The public issue was subscribed 76.42 times in the Qualified Institutional Buyer (QIB) category, 17.33 times in the Non-Institutional Investor (NII) category and 2.58 times in the retail category.
Aadhar is the largest HFC in the low income housing segment (ticket size less than Rs 15 lakh). The company has robust and comprehensive systems and processes for underwriting, collections, and monitoring asset quality.
It also has an internally developed credit assessment model and has digitised monthly collections from customers to the extent possible to reduce processing and improve collection efficiency. Aadhar benefits from the resources, relationships, and expertise of Blackstone, one of the world's leading investment firms, according to analysts.
Aadhar’s asset under management (AUM) increased from Rs 13,327 crore in FY21 to Rs 19,865 crore as of December 2023, and grew at a CAGR of 17.3 per cent.
It is likely that Aadhar sustains this growth in future as the low income housing segment financiers do not face competition from banks and large NBFCs as it involves several complexities like: tricky collateral evaluation, difficulty in assessing customer cash flows especially in case of self-employed borrowers and high cost of operations, said analysts at Nirmal Bang Research.
On most other metrics, 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, the brokerage firm believes Aadhar deserves to trade at some minor discount to peer multiples.
Analysts at Aditya Birla Capital believe that Blackstone’s resources, relationships, and expertise and market leader in the low-income housing segment (ticket size less than Rs 15 lakh) in India can create a huge opportunity going forward.
Affordable Housing Finance Players have managed to maintain/ improve their return profiles through higher yields, lower cost of funds and well managed asset quality. Continued branch expansion in existing and newer geographies coupled with government focus would continue to support their growth.
Aadhar is a bet on the low ticket size affordable housing segment. Given the current size of Aadhar, the company is well positioned to capture the huge untapped opportunity in more than Rs 15 lakh ticket size segment, via deeper penetration in new geographies. In addition, an experienced management team with a strong track record along with backing of Blackstone boosted confidence, analysts at Systematix Institutional Equities said in an IPO note.
