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India Shelter Finance Corporation (India Shelter), a leading player in the affordable housing segment, made a strong stock market debut, with its shares listing at Rs 620, a premium of 26 per cent over the issue price of Rs 493 on the National Stock Exchange (NSE).
The stock of the housing finance company listed at Rs 612.70 on the BSE, up 24 per cent over its issue price.
At 10:05 AM; India Shelter was quoting at Rs 573.35, down 7.5 per cent from its listing price on the NSE. It hit a high of Rs 630 and a low of Rs 566.65 so far.
A combined 10.34 million equity shares had changed hands on the NSE and BSE.
The IPO attracted a healthy subscription of 38.59 times. It was a combination of a fresh issue (Rs 800 crore) and an offer-for-sale (OFS) portion (Rs 400 crore).
The net proceeds from the fresh issue will be utilised for future capital requirements towards onward lending and general corporate purposes.
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The company provides loans for house construction, extension, renovation, and the purchase of new homes or plots. The company also offers loans against property (LAP).
The company offers loan amounts ranging from Rs 5 lakh to Rs 50 lakh for a tenure of up to 20 years. The company has a network of 203 branches spread across 15 states, with 203 branches as of September 30, 2023.
The Indian housing finance market clocked a healthy 13.5 per cent CAGR.
India Shelter boasts strong fundamentals built on years of experience in the affordable housing market. The company has a diverse portfolio and strong distribution network, catering to the growing demand for quality and affordable homes.
Additionally, India Shelter has demonstrated consistent financial performance with a track record of revenue and profit growth.
Between FY21-23, they witnessed a two year CAGR growth of 40.8 per cent in terms of assets under management (AUM).
"Their target segment is the self-employed customer with a focus on first time home loan takers in the low and middle income group in Tier II and Tier III cities in India. This helps in generating relatively high yields on advances," analysts at Geojit Financial Services said.
The housing finance sector of India comprises public sector banks, private sector banks, housing finance companies, non-banking financial companies and other players.
The overall size of the affordable housing finance market in India in terms of loan outstanding was around Rs 11.5 trillion as of March 2023, constituting around 37 per cent of the overall housing finance market.
The Indian housing finance market recorded a CAGR of approximately 13.5 per cent (growth in loan outstanding) over the financial years 2019-2023 on account of a rise in disposable income, healthy demand, and a greater number of players entering the segment, the brokerage said quoting a CRISIL report.
The company was valued at P/BV of 2.4x/2.5x of its 1HFY24 financial data at the lower and upper price band respectively on post-issue capital.
The company’s business model is analytical-driven and scalable, with strong underwriting, collection, credit control, and collateral evaluation processes, SBI Securities said.
The brokerage is optimistic about their niche presence in the affordable housing space and would recommend for medium to long term play.
