A quick review of Aadhar Housing Finance Limited

Aadhar Housing Finance Limited has launched its IPO on 8th May, with a 3-day window (8th to 10th May). As investors get ready to bid for the Aadhar Housing Finance IPO, let's first go through a quick summary of the company's strengths, risks, financial performance, and IPO terms.

Company Overview

Aadhar Housing Finance handles the low-income segment in the Indian housing sector, serving the economically weaker and medium-income groups. Established in 2010, this company provides a wide assortment of mortgage loan products, such as residential property purchase and construction, home improvement, and extension. On the other hand, it provides loan services for the acquisition and development of commercial properties.

IPO Details

The IPO of Aadhar Housing Finance Limited, worth ₹30000 million at the upper price band, will feature a fresh issue of ₹10,000 million and an offer for sale by the promoters, BCP Topco VII Pte Ltd, of ₹20000 million. The stock size of the IPO is 47 shares, and the minimum investment is ₹14,805. Trading of the equity shares on the Stock Exchanges will start on or about May 15th.

Business model and financial health

Aadhar Housing Finance focuses its activities of financing for affordable housing towards the economically weaker section (EWS) and the low-income group (LIG). The company has strategies to expand their distribution network to achieve deeper penetration in key states.

Financially, the firm’s assets under management (AUM) has grown to 198,651.6 million , while the net interest margins (NIMs) increased and have gone up to 9% as on H1FY24. Additionally, it keeps gross non-performing assets (GNPAs) within a reasonable range, which is indicative of a healthy asset quality.

Source: RHP

Key IPO details:

• Dates: May 8–10, 2024, with May 8th being included as well.
• Issue Size: ₹30000 million at the upper price band price.
• Price Band: ₹300 to ₹315 per share
• Minimum Investment: ₹14,805 (the lot size is 47 shares).
• Listing Date: May 15, 2024 (on BSE and NSE)
• Face Value: ₹10 per share

Understanding the IPO Structure

Aadhar Housing Finance’s IPO will be an amalgamation of fresh issuance of shares and an offer for sale (OFS) by the promoter.

• Fresh Issue: The company gets access to new capital here, but the earnings per share (EPS) gets dilated, and also the equity ownership gets lowered. Aadhar Housing Finance will float a fresh issue of 31,746,032 equity shares at the upper price band, seeking up to ₹10,000 million via the equity market.

• Offer for Sale (OFS): This means offloading the existing shares owned by BCP Topco VII Pte Ltd (promoters). They will sell their 63,492,063 shares with the plan to raise ₹20,000 million at the upper price band.

Source: RHP

Final words

To conclude, the IPO of Aadhar Housing Finance Limited offers a valuable chance to invest in the firm, which is aimed at satisfying the housing requirements of the low-income groups in India. Seasoned business model, extensive branch and sales office network and access to diversified and cost-effective long-term financing makes Aadhar Housing Finance stand out in the affordable housing finance sector. By conducting proper due diligence and assessing their respective investment goals, buyers can take advantage of the possible expansion of Aadhar Housing Finance in the housing finance sector.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.

Source: RHP