With their IPO, India’s leading private player in the fastest-growing sub-segment of affordable housing is about to enter the stock markets. The Company intends to raise an aggregate of Rs. 7300 crores through its Initial Share Sale, according to the DHRP filed with SEBI.
Aadhar Housing Finance Ltd, with the motto “Ghar Banega Toh Desh Banega,” is a leading provider of affordable housing solutions across India. With a robust technological edge and lofty goals, the Company has decided to foray into the bourses with an upcoming IPO.
The IPO market is expected to be hot in 2023, as it has been in the previous two years. You can attribute rising business interest to rapid digitalization, strong listing performance, or a steady increase in investor participation for the buoyancy in the market.
Several companies, from unicorns to tech startups and from healthcare to finance banks, have already announced plans to go public this year. One such Company is Aadhar Housing Finance Ltd, all set to raise Rs. 7300 crores by combining a fresh issue and an Offer For Sale.
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Let us glance at the Last 3 Years’ IPO Performance-
In FY 20, the large IPOs (with issue size > 15 billion) have been the best performers with the highest average listing gains-
This article will provide a comprehensive overview of the Aadhar Housing Finance IPO, allowing you to make a confident investment decision.
Aadhar Housing Finance Ltd IPO Details
Aadhar Housing Finance Ltd filed its Draft Red Herring Prospectus (DRHP) on 24th Jan 21 with the market regulator SEBI to launch a mega IPO of Rs. 7300 Crores. The Company targets to raise this aggregate corpus through a combination of Fresh issues worth Rs. 1500 Crores and the secondary issue of shares worth Rs. 5800 Crores from existing shareholders.
The Aadhar Housing Finance IPO is the first in the last five years of an Indian portfolio company backed by Blackstone, a US-based private equity behemoth.
| IPO Status | Not Yet Announced |
| IPO Date | Not Yet Announced |
| Total IPO Size | Rs.7300 Crore ( Fresh issuance – Rs. 1500 and OFS – Rs. 5800/-) |
| No. of Shares for IPO | Not Yet Announced |
| Issue Price Band | Not Yet Announced |
| IPO listing at | BSE and NSE |
| Face Value per Equity Share | Rs. 10/- |
| Retail Allocation | 35% |
About Aadhar Housing Finance Ltd Company
Aadhar Housing Finance Ltd is an unlisted public limited company owned by U.S. investment giant Blackstone. This Company, headquartered in Bangalore, has an Authorized share capital of Rs. 500 Crore and a Paid-up capital of Rs. 395 Crore.
| Company | Shareholding % |
| BCE Topco VII Pte Ltd | 98.72 |
| ICICI Bank Ltd | 1.18 |
| IEPF Authority | 0.03 |
| Other Resident Shareholders | 0.07 |
Aadhar Housing Finance Ltd employs over 2700 people and operates through a network of 341 branches and offices across India. The housing finance company has expanded to 20 states and union territories and has been titled “The Best Brand 2021” by The Economic Times.
Aadhar Housing Finance Ltd is the largest Housing finance company serving the low-income housing market, with an AUM of Rs. 14778 (as of March 31, 2022). The Company boasts best-in-class metrics, with a 10.9% increase in gross AUM and a 12.6% increase in loan disbursements.
Key Business Offerings of Aadhar Housing Finance Ltd
The Company offers a broad array of mortgage-related products that include-
- Home Loan For Self Employed/ Business Class/ Salaried employees
- Loans for Improvement/ Construction/ Extension
- Loans against Property (LAP)
- Loans for Purchase of Residential/ Non-Residential Property
Financial Analysis of Aadhar Housing Finance Ltd
- Due to lower penetration and less competition in this small ticket size ( <15 Lacs) home finance, the Company focused on low-income growth and recorded an increase in AUM of Rs. 14778 Crore in FY 22.
- Due to a drop in incremental cost of funds from 8.15% to 7.23%, a sharp rise in Net Profit Margins (NIM) can be seen.
- Net Worth/ Total Equity and ROE % have improved over the last three years.
- Aadhar Housing Finance Ltd. has shown a robust growth of 30.8 % over the last financial year in Profit After Tax (PAT).
- Increasing trends of key financial metrics such as earnings per share (EPS), revenue from operations, and ROE % imply the Company’s good health.
- In FY 2022, the Company delivered a strong Return on Assets (ROA) of 3.18% and a Return on Equity (ROE) of 15.23%, compared to 2.62% and 13.49% in FY 2021.
| 31st Mar 20 (in Crores) | 31st Mar 21 (in Crores) | 31st Mar 22 (in Crores) | |
| AUM | 11,432 | 13327 | 14778 |
| Income | 1372 | 1550 | 1693 |
| PAT | 189 | 340 | 445 |
| Net Worth/Total Equity | 2347 | 2693 | 3145 |
| ROE% | 11.81% | 13.49% | 15.23% |
The Strengths and Weaknesses of Aadhar Housing Finance Ltd
Strengths
- Because of the wide geographical presence, there is a low concentration of risk exposure, and no single state adds more than 15% AUM value.
- With an average ticket size of Rs. 8.75 Lacs, 100% secured retail advances are available. Meets the RBI/priority NHB’s sector lending requirements.
- Significant growth in collection efficiency over the last year, from 91% in April to 104% on March 22, is testimony to well-integrated and efficient systems for underwriting, collections, and asset quality monitoring.
- The high share of loans to salaried employees as 61.5% of the Company’s AUM. Salaried employees are more economically resilient, contributing to the Company’s stability.
Risks
- Housing Finance Companies are sensitive to changes in interest rates and prudential norms laid down by RBI/NHB. Other risks encircling HFCs are Credit Risk, Liquidity Risk, Cash Management Risks, Collateral Risk, etc.
- The percentage of Retail NPA on AUM has increased over the years. If not checked, it may adversely affect the Company’s financial health.
- The continuous impact of the pandemic led to an increase in customer delinquency.
| 31st Mar 20 | 31st Mar 21 | 31st Mar 22 | |
| RETAIL NPA(%) | 0.82 | 1.07 | 1.45 |
The objective of Launching Aadhar Housing Ltd IPO
Through IPO, Aadhar Housing Finance Ltd aims to access cheaper funds to sustain cost-efficient long-term financing. This will also help the Company reduce its overall borrowing costs, thereby increasing profit margins.
Aadhar Housing Finance Ltd.’s debt-to-equity ratio has been reduced from 3.85% in 2021 to 3.39% in 2022, indicating the Company’s intention to expand its capital base.
Should You Buy Aadhar Housing Finance IPO or Let it Pass?
Though financial ratios enhance positive sentiment for purchasing Aadhar Housing Finance IPO, they do not eliminate financial companies’ susceptibility to potential risks. Increasing NPA levels can potentially dent the Company’s revenue and PAT.
Any potential downgrade in the Aadhar Housing Finance Ltd can increase the new debts’ lending rates, damaging its Net Profit Margins.
The strong parentage of Aadhar Housing Finance Ltd from Blackstone Inc. and Government policies supporting affordable housing loans can stimulate growth in the Company after capital infusion. However, given geopolitical tensions, frequent rate revisions by the RBI, and high inflation, it may be challenging to make reliable predictions about the IPO’s performance.
Disclaimer: The numbers mentioned in this article are for information purposes only. He/she should not consider this a buy/sell/hold recommendation from Research & Ranking. The company shall not be liable for any losses that occur.
FAQs
When is Aadhar Housing Finance IPO expected to be listed on the stock markets?
These details are yet to be finalized.
Where can I check the Allotment status of the Aadhar Housing Finance IPO?
You can check the status of the IPO on the NSE website or the website of the Registrar and Transfer agent.
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