Aadhar Housing Finance Ltd IPO

Upcoming DRHP

IPO Synopsis

IPO Synopsis:
Aadhar Housing Finance Ltd filed its DRHP with SEBI worth around Rs.7,300 crore. The issue comprises of a fresh issue worth Rs.1,500 crore and an offer for sale of equity shares worth Rs.5,800 crores. 
The book running lead managers to the issue are ICICI Securities, SBI Capital Markets, Citigroup Global Markets and NOMURA Financial Advisory and Securities. The promoter is BCP Topco VII Pte Ltd.

Objectives of the issue:
The main objective of the issue is to set aside Rs.1,500 crore for the augmentation of the capital base of the company.

About Aadhar Housing Finance Ltd

As of 31 March 2020, Aadhar Housing Finance is the largest HFC in India, in terms of AUM. When compared to their peers, Aadhar has the largest customer base and the highest disbursement for FY20. 
As of 30 September 2020, the company has 292 branches which cover 20 states all over the country. 56% of the branches are spread across 5 states and the remaining 44% are spread across 15 states in the country. According to a report by CRISIL, the maximum amount of housing finance demand exists in 10 states of India, and Aadhar Housing Finance is present in all those 10 states. They have a total of 2,088 employees as of 30 September 2020 and their subsidiary in which they hold a 100% stake, has a total of 1,326 employees. 
The company had crossed around 150,000 accounts in FY20 and crossed 165,000 in as on 30 September 2020. A large percentage of their customers belong to the low-to middle income class of the society. 35.17% of the customers are self-employed individuals and 64.83% are salaried individuals. The company also offers loans for property renovations, property extensions, and loans for purchase of commercial properties. 
They have been able to manage an average ticket size of Rs.0.83-0.85 million which is an attractive range for a housing finance company. In 2018, the company launched a sales channel called “Aadhar Mitra”. These people are those who are in non-allied industries, and they act as lead providers to the sales team of the company. 
 

Financials:

Particulars

(In Rs cr)

Q2 ended 30 September, 2020

FY20

FY19

FY18

Total Income

748.35

1,388.47

1,265.63

815.12

PAT

156.4

189.4

161.88

114.2

EPS (In Rs)

3.85

5.83

6.39

5.32

 

Particulars

(In Rs cr)

Q2 ended 30 September, 2020

FY20

FY19

FY18

Total Assets

12,830.3

12,366.4

9,480

7,801.5

Total Borrowings

9,637.9

9,643.3

8,194.9

6,317.8

Equity Share Capital

39.48

39.46

25.15

25.15

 

Key Financial Indicators:

 

Particulars

(In Rs cr)

Q2 ended 30 September, 2020

FY20

FY19

FY18

Retail AUM

(In Rs cr)

12118

11389.6

9920.8

7835.3

Gross Retail NPA (%)

0.74%

0.82%

0.58%

0.58%

Return on Total Assets (%)

2.61%

2.30%

1.87%

1.76%

ROE

13.27%

15.46%

20.53%

18.77%

Debt to Equity ratio

3.84

4.11

9.54

8.80

Capital Adequacy ratio (%)

47.84%

51.42%

18.28%

18.76%

Net Interest Margin (%)

5.29%

5.45%

6.18%

5.41%

Cost to Income ratio

34.61%

42.76%

47.39%

45.92%

 

Peer comparison:

Company

ROE (%)

ROA (%)

Cost to Income ratio

Capital Adequacy ratio

GNPA

Aadhar Housing Finance

11.8%

1.7%

41.2%

51.4

1.3

Aavas Financers

12.7%

3.8%

42%

56

0.3

Motilal Oswal Home Finance

4.6%

0.9%

41%

47.6

1.8

Home First Finance Company

10.9%

2.6%

45.2%

48.9

1

Magma Housing Finance

10.3%

1.9%

56.4%

36

1.6

Aptus Valley Housing Finance

15.4%

6.3%

26.4%

82.5

0.8

Shriram Housing Finance

9.5%

2%

55.2%

27.8

2.4

Muthoot Finance

7.8%

1.7%

46.6%

51.3

1.9


The Key points are- 

IPO Key Points

  • Strengths

    1.    Aadhar Housing Finance is the largest affordable housing finance company in the country as of 31 March 2021, in terms of AUM. They are around 1.5 times larger than the second peer
    2.    They have a high level of market penetration, geographical expansion and sales channel
    3.    They have very efficient and comprehensive systems for underwriting, collections and for monitoring the asset quality
    4.    They have access to a highly diversified and cost-effective long-term financing 
     

  • Risks

    1.    There has been an increase in the number of delinquencies and the moratorium mandated by the RBI will adversely affect the operations of the company
    2.    The HFC is very vulnerable to the volatility in interest rates, and this may cause liquidity issues in the future
    3.    If the non-performing assets increase, it will adversely affect the company
     

How to apply for an IPO?

  • Login to your 5paisa account and select the issue in the current IPO section

  • Enter the number of lots and price at which you wish to apply for

  • Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange

  • You will receive a mandate notification to block funds in your UPI app

  • Approve the mandate request on your UPI and funds will be blocked