Only the employee component of the Aadhar Housing Finance IPO was entirely booked on the first day, which was a gradual and steady start. On day one of the Aadhar Housing Finance IPO, 44% of subscribers were active. Retail investors made up 41% of the booked category, while non-institutional investors made up 60% of the subscription. A 33% quota was reserved for qualified institutional buyers (QIBs).
Starting on Wednesday, May 8, and ending on Friday, May 10, is the subscription period for the Aadhar Housing Finance initial public offering. A price range of ₹300 to ₹315 per share has been set for the Blackstone-backed company’s IPO. Anchor investors contributed Rs. 898 crore to the Aadhar Housing Finance initial public offering (IPO) on Tuesday, May 7. Multiples of 47 shares are eligible for bidding, with a minimum bid of 47 shares.
In the Aadhar Housing Finance IPO, retail investors received 35% of the issue size, retail investors received 15%, and qualified institutional buyers (QIBs) received 50%. All other investors received the remaining portion of the issue size. A discount of ₹23 per share is available to firm employees.
Kejriwal Research and Investment Services was founded by Arun Kejriwal, who tells us that the DHFL group bought the company after they filed for bankruptcy in 2016 and 2017.
The company being acquired had no problems and was in perfect condition, but the organization was facing several difficulties. The business specializes in low-income housing and is a house finance provider with a ₹15 lakh ticket size cap.
Kejriwal claims that the company’s EPS for the fiscal year that ended in March 2023 was ₹13.8, or ₹13.4 when fully diluted. The 22.4–23.5 PE range corresponds to the diluted earnings issue. The net asset value of the company as of December 23 is ₹107.6. The cost to book at this NAV is 2.92 at the upper end of the range.
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Based on the post-issue, the NAV would rise to ₹123.07 at the top of the band and the ratio would stay at 2.56 times the price to book. When compared to the peer group, this fared remarkably well. This circumstance offers potential for profit in the medium to long run. There would also be some listing pop, according to Arun.
Specifics of Aadhar Housing Finance’s IPO
The ₹3,000 crore initial public offering (IPO) of Aadhar Housing Finance consists of a new equity share issue valued at ₹1,000 crore and an OFS (offer for sale) for ₹2,000 crore made by promoter BCP Topco VII Pte Ltd, a subsidiary of the Blackstone Group.
BCP Topco VII Pte, the promoter of the OFS, plans to divest its interest. Presently, 98.7% of the pre-offer issued, subscribed, and paid-up equity share capital is owned by BCP Topco, the promoter and affiliate of Blackstone funds.
In addition to using the net proceeds for regular business operations, the company plans to meet future capital requirements for additional lending.
The book running’s main managers are Kotak Mahindra Capital Company Limited, SBI Capital Markets Limited, ICICI Securities Limited, Nomura Financial Advisory and Securities (India) Pvt Ltd, and Citigroup Global Markets India Private Limited. This issue’s registrar is Kfin Technologies Limited.
Review of the Aadhar Housing Finance IPO
Canara Bank Securities
The brokerage ascribes the company’s increased cost-to-income ratio, which raises its net interest margin, to its deliberate efforts to differentiate itself from industry rivals. The company has also consistently maintained good asset quality since 2021. The company is currently run by BCP Topco VII PTE Ltd, with backing from Blackrock Group, after 80% of DHFL’s shares were transferred in 2019. The home finance company’s loan book has just 0.1% of the loan accounts in the DHFL pool. Despite the fact that the company may have to pay up to 269 crores in legal fees, which could negatively affect its finances, the IPO appears to have been appropriately valued at a P/B of 3.36x. To take advantage of listing profits, the brokerage suggests subscribing to the issue.
SMC Global
According to the brokerage, the company is valued at the upper end of the ₹315 price band, or 17.02x pre-issue P/E on annualized FY24 EPS of ₹18.51, after accounting for the P/E valuation. After being issued, the stock’s value is calculated using its annualized FY24 EPS of Rs. 17.13, or a P/E of 18.39x. A 2.81x P/B ratio is shown by looking at the pre-issue P/B ratio at Rs. 315 with a book value of Rs. 112.27. Post-issue book value of Rs. 127.36 of P/Bvx 2.47x.
According to the brokerage, Aadhar Housing Finance Limited has a sizable advantage over HFCs in the low-income housing industry. With 498 branches, it is well-represented in all of India. Strong and comprehensive processes and procedures are used by the company for asset quality monitoring, collection, and underwriting. It made the switch to a digital IT architecture in order to save costs, analyze client data in real time, improve control and underwriting capabilities, and increase its customer base and distribution reach. It’s possible for long-term investors to select the issue.
IPO GMP for Aadhar Housing Finance today
GMP for the IPO of Aadhar Housing Finance is +71. According to investorgain.com, this suggests that the price of Aadhar Housing Finance shares were selling at a premium of ₹71 in the grey market.
Aadhar Housing Finance shares are expected to list at ₹386 per share, which is 22.54% more than the IPO price of ₹315 when the upper end of the IPO pricing range and the current premium on the grey market are taken into account.
Investor willingness to pay over the issue price is indicated by the “grey market premium.”
(Disclaimer: This is not a Businessuncover endorsement; rather, the opinions and suggestions expressed above are those of specific analysts, specialists, and brokerage firms. Before making any financial decisions, we suggest investors to consult with qualified specialists. )
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