Aptus Value Housing Finance India Ltd Incorporated on December 11, 2009, is an entirely retail focussed housing finance company primarily serving low and middle income self-employed customers in the rural and semi-urban markets of India. The company offers home loans to retail customers to purchase homes, construct residential property, house improvement and extension, loans against property, and business loans.
It conducts all aspects of lending operations in-house including sourcing, underwriting, valuation and legal assessment of collateral and collections, which enables them to maintain direct contact with the customers, reduces turn-around-times and the risk of fraud. Aptus had the largest branch network in south India among its Peer Set, As of March 31, 2021, the company had a network of 190 branches covering 75 districts in the states of Tamil Nadu (including the union territory of Puducherry), Andhra Pradesh, Karnataka and Telangana.
Promoters & Shareholding:
M. Anadan, Padma Anandan, and Westbridge Crossover Fund, LLC are the company’s promoters with a pre issue holding of 74.87%.
Public Issue Details:
Offer for sale: Fresh issue of approx. 14,164,290 equity shares of Rs. 10 aggregating up to Rs. 500 Cr and OFS of approx. 64,590,695 equity shares aggregating up to Rs. 2,280 Cr.
Total IPO Size: Rs. 2,780.05 Cr.
Price band: Rs. 346 – Rs. 353.
Objective: For augmenting the company’s capital base and meeting future growth requirements.
Bid qty: minimum of 42 shares (1 lot) for Rs. 14,826 and maximum of 13 lots.
Offer period: 10th Aug 2021 – 12th Aug 2021.
Date of listing: 24th Aug 2021.
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- One of the largest housing finance companies in South India in terms of AUM.
- In-house operations leading to reduce turn-around-time and risk of fraud.
- Professional and experienced management team.
- Established track record of financial performance with industry leading profitability.
- Its liquidity may be affected by the COVID-19 pandemic which may have adversely effect on its business.
- The risks of non-payment or default by borrowers since substantial portion (36% of AUM) of its customers are first time borrowers.
- The company is affected by volatility in interest rates for both lending and treasury operations.
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Subscribe or avoid?
The Indian housing finance market clocked a healthy CAGR of approximately 12% over Fiscals 2018 to 2021 on account of a rise in disposable income and in the next % years it is expect to grow at a CAGR of 9%-10%. The growth in house finance market is mainly attributed to increasing penetration of housing finance, rise in disposable income, governments various initiatives to provide people in both urban and rural areas with affordable housing is expected have positive impact on the company and its business since it mainly caters to mid and low income households.
On the financial side, the company has had strong financial performance for the past 3 year; they have reported revenue of Rs. 655.24Cr, Rs. 523.72 Cr and Rs. 337.12 Cr in the FY21, FY20 and FY19 respectively and net profit of Rs. 266.94 Cr, Rs. 211 Cr and Rs. 111.48 Cr in the FY21, FY20 and FY19 respectively. Its revenue grew by a cagr of 24.8 % in the last 3 years.
Analysing from the valuation perspective, for the last 3 years average EPS of Rs 4.83, P/E ratio is around 73x. On the upper price band of Rs 353 and EPS of Rs 5.55 for FY21, the P/E ratio works out to be 63.6x. The company is asking issue price in the P/E range of 63.6x to 73x. Currently we have only one listed peer (who is in similar business) Aavas Financiers which is trading at 67.4x. Hence, this IPO is aggressively priced. However considering the strong profitability, growth potential, other positive factors, and good Investors appetite for the IPOs, we recommend “SUBSCRIBE” from medium to long term perspective.
This article should not be construed as an investment advise, please consult your Investment Adviser before making any investment decision.