Forthcoming

Aptus Housing Finance Limited IPO

Initial Public Offer

Aptus Value Housing Finance India Ltd is an entirely retail-focused housing finance company primarily serving low and middle-income self-employed customers in the rural and semi-urban markets of India. Company had the highest RoA of 5.7% among the Peer Set during the financial year 2021. It is the largest housing finance companies in south India in terms of AUM, as of March 31, 2021. Its AUM has increased from March 31, 2019, to Rs.4067.76Cr as of March 31, 2021, at a CAGR of 34.54%. Additionally, Company has not restructured nor written off any loan since inception as on Mar’21. Its total branch tally was 192 as on July 10, 2021.

Issue Details

The issue comprises of OFS of upto Rs 2,280 crore and Fresh issue of Rs 500 Cr

  • Face Value: Rs 2
  • Present Eq. Paid up Capital: Rs 96.3 cr
  • Offer for Sale: Rs 2,280 cr
  • Fresh issue: Rs 500 cr
  • Post Eq. Paid up Capital: Rs 99.1cr
  • Issue size (amount): Rs 2,735 – Rs 2,780 cr
  • Price Band: Rs 346-353
  • Lot Size: 42 shares and in multiple thereafter
  • Post-issue mkt. cap: * Rs 17,147 cr – ** Rs 17,494 cr
  • Promoters holding Pre-Issue: 74.8%
  • Promoters holding Post-Issue: 72.2%

Book Building

  • QIBs 50% of issue
  • Non-Institutional 15% of issue
  • Retail 35% of issue

Post Issue Shareholding Pattern

  • Promoters 72.2%
  • Others 27.8%

Positives:

(a) Presence in large, underpenetrated markets with strong growth potential.

(b) Robust risk management architecture from origination to collections leading to superior asset quality

(c) In-house operations leading to desired business outcomes

(d) Domain expertise resulting in a business model difficult to replicate by others in our geographies

(e) Experienced and stable management team with marquee shareholders

(f) Established track record of financial performance with industry leading profitability.

Investment concerns:

(a) Pandemic like Covid-19 could affect company’s business, operations and financial conditions.

(b) Any disruption in sources of capital could have an adverse effect on the business, results of operations and financial condition

(c) Inability to meet our obligations, including financial and other covenants under debt financing arrangement.

(d) NHB’s consent to undertake the Offer is subject to certain conditions.

Outlook & Valuation:

Aptus has posted strong growth in both NII and net profits of 46.2% and 54.7% between FY19-FY21. Despite the Covid-19 crisis the company’s asset quality has remained largely stable with GNPA and NNPA largely stable at 0.6% and 0.5% respectively at the end of FY2021. At the higher end of the price band the stock would be trading at P/BV of 8.5x FY21 BVPS of Rs. 41.7 which is in line with Aavas Financers which is a comparable company. Given strong growth prospects, and industry leading return ratios we recommend a SUBSCRIBE rating on the issue.

Company background

The company was incorporated as ‘Aptus Value Housing Finance India Limited’ at Chennai on December 11, 2009. The Promoters of the company are M. Anandan, Padma Anandan, and WestBridge Crossover Fund, LLC. It is entirely retail focussed housing finance company primarily serving low- and middle-income self-employed customers in the rural and semi-urban markets of India. They are one of the largest housing finance companies in south India in terms of AUM, as of March 31, 2021. The company has not restructured any loans or written-off any loans receivable as on Mar,31 2021.

Objectives of the Offer  

  • To augment company’s capital base to meet future capital requirements.
  • To meet issue related expenditures.
  • To achieve share listing benefits on the stock exchanges.n
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