Aadhar Housing Finance IPO

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The business overview highlights the performance and strategic positioning of a Housing Finance Company (HFC) focused on serving the low-income housing segment in India. Here are the key aspects of this HFC’s operations:

1. Market Leadership and Financial Performance: The company has demonstrated strong financial performance with the highest Assets Under Management (AUM) and net worth among peers, according to CRISIL, for consecutive years up to 2023. This achievement is underscored by consistent growth in AUM, reaching ₹198,651.6 million by December 2023.

2. Customer Base and Loan Characteristics: The company predominantly serves economically weaker and low-to-middle-income groups, offering them small ticket mortgage loans. The average loan size is around ₹1.0 million with a loan-to-value ratio of approximately 58%, showcasing a targeted approach to addressing the needs of its primary customer segment.

3. Operational Reach: With 487 branches and 109 sales offices spread across 20 states and union territories, the company boasts the most extensive network among its peers. This geographical spread allows the company to cater effectively to urban and semi-urban areas, supporting regional economic development and enhancing access to housing finance.

4. Product Portfolio: The range of products includes residential property purchase loans, construction loans, home improvement and extension loans, and commercial property loans. This diversified portfolio enables the company to meet various customer needs within its target market.

5. Technology and Operational Efficiency: The company has invested in digital infrastructure to enhance loan processing and customer service. This includes specialized processing units for different customer segments and a robust digital collections system to improve efficiency and reduce operational costs.

6. Financial Inclusion and Social Impact: A core aspect of the company’s mission is to improve the standard of living for its customers through financial inclusion. This commitment is integrated into the business model and is evident in its expansive network which also provides local employment opportunities.

7. Funding and Financial Stability: The company maintains a strong focus on long-term borrowings, with 100% of its borrowings being long-term as of recent fiscal years. This prudent borrowing strategy is complemented by competitive borrowing costs and a stable funding base from diverse sources including banks, mutual funds, and other financial institutions.

8. Corporate Governance and Management: With a management team averaging 25 years of experience and a strong corporate governance framework enhanced by its association with Blackstone, the company is well-positioned for sustainable growth. Blackstone’s involvement provides access to substantial resources and global financial networks.

This overview suggests that the company is not only a leader in its sector but also strategically positioned to continue its growth trajectory while contributing significantly to the socioeconomic development of its target customer segments.

Objects of the Aadhar Housing Finance IPO:

The Company proposes to utilize the Net Proceeds towards the following: i. To meet future capital requirements towards onward lending; and ii. General corporate purposes. Total number of shares issue :- i. Fresh issue is 31,746,032 shares, ii. Offer for sale is 63,492,063 shares.
DRHP of Aadhar Housing Finance IPO
RHP of Aadhar Housing Finance IPO

Aadhar Housing Finance IPO Details:

Open Date: May 08 2024
Close Date: May 10 2024
Total Shares: 95,238,095
Face Value: ₹ 10 Per Equity Share
Issue Size: 3,000.00 Cr.
Lot Size: 47 Shares
Issue Price: ₹ 300 - 315 Per Equity Share
Listing At: NSE,BSE
Listing Date: May 15 2024

Promoters And Management:

Om Prakash Bhatt is the Non-Executive Chairman and Independent Director of the Company. He holds a bachelor’s degree in Science from Meerut University, and a master’s degree in English Literature from the same university. He has previously served as the chairman of State Bank of India. He is also serving as a director on the boards of Hindustan Unilever Limited and Tata Group companies, including Tata Motors Limited, Greenko Energy Holdings Mauritius, Tata Daewoo Commercial Vehicle Limited, TML Holdings Pte. Limited and Tata Consultancy Services Limited. He was appointed as the Non-Executive Chairman and Independent Director on the Board of the Company with effect from September 13, 2019 and has been reappointed by the Shareholders at the Annual General Meeting held on August 18, 2022. Sharmila A. Karve is an Independent Director on the Board of the Company. She holds a bachelor’s degree in commerce from University of Bombay and is a qualified chartered accountant from the Institute of Chartered Accountants of India. She was previously associated as a partner with Lovelock & Lewes LLP, Price Waterhouse & Co Bangalore LLP, Dalal & Shah Chartered Accountants LLP, Price Waterhouse Chartered Accountants LLP; Price Waterhouse & Co Chartered Accountants LLP and Price Waterhouse & Co LLP. Presently, she is a director on the boards of EPL Limited (formerly known as Essel Propack Limited), EPL Packaging (Guangzhou) Limited, Lamitube Technology Limited, Mauritius, EPL America LLC, Fairfax India Holdings Corporation, Syngene International Limited, Vanaz Engineers Limited, CSB Bank Limited, Thomas Cook (India) Limited and School for Social Entrepreneurs India. She was appointed as an Independent Director on the Board of the Company with effect from December 15, 2020 and has been re-appointed by the Shareholders at the Extra-Ordinary General Meeting held on December 13, 2023. Nivedita Haran is an Independent Director of the Company. She holds doctorate in philosophy in humanities and social sciences from the Indian Institute of Technology, Delhi. She retired as the Additional Chief Secretary, Department of Home Affairs, Government of Kerala, India. She is also on the board of NESL Asset Data Limited as Chairperson (Independent). She serves as the honorary chairperson on the board of directors of Centre for Migration and Inclusive Development. She was appointed as an Additional (Independent) Director on the Board of the Company with effect from September 15, 2018 and she has been re-appointed by the Shareholders at the Annual General Meeting held on June 29, 2020. Her term was extended for a further period of two years by the Shareholders at the Extra-Ordinary General Meeting held on May 26, 2022.

Financials of Aadhar Housing Finance IPO:

A. Balance Sheet
Particular (In Million) Mar-21 Mar-22 Mar-23 9MFY24
Equity Share Capital 3,947.6 3,947.6 3,947.6 3,947.6
Reserves 22,981 27,519 33,029 38,544
Borrowings 81,104 88,190 95,427 107,246
Trade Payables 387 510 805 849
Other Liabilities 27,884 23,592 32,970 29,770
Total Liabilities 136,303 143,758 166,179 180,356
Net Block 164 208 248 283
Other Assets 1,143 960 975 1,188
Total NC Assets 1,307 1,168 1,222 1,471
Receivables 27 52 80 259
Cash & Bank 21,713 17,102 19,180 12,218
Housing and other loans 106,133 119,603 138,515 159,095
Other Assets 7,124 5,834 7,183 7,314
Face value 10 10 10 10
B. Profit & Loss Statement
Particular (In Million) Mar-21 Mar-22 Mar-23 9MFY24
Sales 15,753 17,283 20,432 18,950
Impairment on financial instruments 549 487 492 454
Employee Cost 1,888 2,482 3,220 2,900
Other Expenses 721 899 1,358 1,188
Other Income 2 3 3 2
Depreciation 112 133 165 152
EBITDA 12,597 13,418 15,365 14,410
EBITDA Margin 79.96% 77.64% 75.20% 76.04%
Interest 8,160 7,612 7,992 7,248
Profit before tax 4,325 5,674 6,958 7,010
Tax 924 1,225 1,511 1,531
Net profit 3,401 4,449 5,448 5,479
NPM (%) 21.59% 25.74% 26.66% 28.91%
C. Cash Flow Statement
Particular (In Million) Mar-21 Mar-22 Mar-23 9MFY24
Cash From Operating Activity
Profit From Operation 4,985 6,167 7,386 7,533
Receivable 14 -25 -28 -179
Other WC Items 1,520 -1,130 1,781 -1,610
Working Capital Changes 1,533 -1,155 1,753 -1,789
Direct Taxes -999 -1,154 -1,417 -1,558
Housing and other property loans disbursed -35,447 -39,919 -59,026 -49,041
Proceeds from assignment of portfolio 5,779 7,721 12,624 11,307
Housing and other property loans repayments 12,126 19,273 27,123 16,965
Net Cash Inflow from Operating Activity -12,023 -9,068 -11,557 -16,582
Cash from Investing Activity
Fixed assets purchased -51 -118 -104 -114
Fixed assets sold 0.4 0.6 3.7 0
Purchase of investment -25,180 -65,231 -83,976 -37,669
Redemption of investments 20,537 67,056 83,080 37,792
Other investing items -111 6,518 -3,769 4,796
Net cash inflow from investing activities -4,805 8,226 -4,765 4,806
Cash from Financing Activity
Proceeds on issue of equity shares 0.2 - - -
Other financing items 7,014 2,749 14,632 9,610
Net Cash Flow -9,814 1,907 -1,690 -2,167

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Aadhar Housing Finance Limited 2,043 545 12.77 24.7 315 13,435
Aptus Value Housing Finance India Limited 1,093 503 10.10 27.9 326 16,255
Aavas Financiers Limited 1,608 430 54.41 25.7 1,596 12,630
Home First Finance Company India Limited 791 228 25.94 27.5 892 7,897
India Shelter Finance Corporation Limited 584 155 35.32 40.4 584 6,256
* All the data is as per FY23.

Recommendation on Aadhar Housing Finance IPO:

Review and Recommendation of Aadhar Housing Finance by team IZ is 6/10. 1. They are a Housing Finance Company (HFC) that specializes in serving the low-income housing segment, with a ticket size of less than ₹1.5 million. They have the highest Assets Under Management (AUM) and net worth among their analyzed peers for the fiscal years 2021 through 2023, as well as for the nine-month periods ending on December 31, 2022, and December 31, 2023. Their operations span 20 states and union territories, which is the broadest among our peers. 2. Customer Focus They cater to economically weaker and low-to-middle-income customers who require small mortgage loans. Their average loan size was ₹0.9 million in December 2022 and ₹1.0 million in December 2023, with an average loan-to-value ratio of approximately 58%. Their portfolio comprises a mix of salaried and self-employed customers. 3. Product Range They offer a variety of mortgage-related products, including loans for residential property purchase, construction, home improvement, and commercial property acquisition. Their financial performance has been consistent, even amid economic fluctuations. 4. Branch Network They have a robust network of 487 branches, including 109 sales offices, covering 20 states and union territories. Their presence spans over 10,926 pin codes, ensuring wide geographical coverage. They operate in areas where housing finance demand is substantial, helping them strategically expand their reach. 5. Technology and Processes They employ comprehensive systems for underwriting, collections, and monitoring asset quality. Their technology-enabled processes aim to digitize the entire loan lifecycle, enhancing efficiency. They leverage a range of lead sourcing channels, focusing on ground-level activities to connect with their target audience. 6. Competition The housing finance industry in India is highly competitive. They compete with HFCs, NBFCs, and commercial banks on product offerings, interest rates, and customer service. Their primary competitors include Aavas Financiers Limited, Home First Finance Company India Limited, and others. 7. The Revenue has Increased from Rs.1,575 Crores in FY21 to Rs.2,043 Crores in FY23. 8. The EBITDA has Increased from 1,259 Crores in FY21 to 1,536 Crores in FY23. 9. The PAT has Increased from 340 Crores in FY21 to 544 Crores in FY23. 10. As per FY23, CFO/EBITDA is 0.48, As per FY24, EPS is 17.12, 11. Market Capitalization is 13,435 Crore & P/E is 18.39x based on FY24.

Lead Manager of Aadhar Housing Finance IPO:

  1. Citigroup Global Markets India Private Limited
  2. ICICI Securities Limited
  3. Kotak Mahindra Capital Company Limited
  4. Nomura Financial Advisory And Securities (India) Private Limited
  5. SBI Capital Markets Limited

Registrar of Aadhar Housing Finance IPO:

  1. Kfin Technology Private Limited

Company Address:

Aadhar Housing Finance Limited 2nd floor, No. 3, JVT Towers, 8th‘A’, Main Road, Sampangi Rama Nagar, Bengaluru-560027 Phone: +91 22 41689900 Email: complianceofficer@aadharhousing.com Website: https://aadharhousing.com/

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