Aadhar Housing Finance IPO: Key details and insights

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The Aadhar Housing Finance IPO, backed by Blackstone, is open for subscription from today to May 10, 2024. Priced between ₹300 to ₹315 per share, the IPO garnered ₹898 crore from anchor investors on May 7, setting the stage for an exciting investment opportunity. Retail investors have been allocated 35% of the issue size, while non-institutional investors (NIIs) and qualified institutional buyers (QIBs) have been allocated 15% and 50%, respectively.
Aadhar Housing Finance Limited, founded in 2010, focuses on providing mortgage loans to economically weaker and low-to-middle-income individuals, particularly in India’s tier 4 and tier 5 towns. With an extensive network of 471 branches and 91 sales offices across 20 states and union territories, Aadhar Housing Finance boasts a significant presence in the market.
Analysts suggest that while the IPO presents an opportunity for high-risk investors, caution is advised due to the company’s high reliance on borrowing. Aadhar Housing Finance primarily caters to customers seeking small-ticket loans, with an average loan size of ₹9 to ₹10 lakhs and a loan-to-value ratio of 58.3% as of December 2023.
Key highlights of the Aadhar Housing Finance IPO include:
Price band: ₹300 to ₹315 per share
Offer type: Book Built Issue of ₹3,000 crore, comprising a fresh issue of 31.7 million shares and an offer for sale (OFS) of 63.5 million shares
Grey market premium (GMP): ₹70 per share as of May 8, 2024
Lot size: 47 shares, with bidding available in multiples thereof
Allocation: 50% for QIBs, 15% for NIIs, and 35% for retail investors
IPO dates: May 8 to May 10, 2024
Allotment: Expected on May 13, 2024
Listing: Anticipated on May 15, 2024, on both the BSE and NSE
Financial performance indicators reveal promising growth for Aadhar Housing Finance, with net profit increasing to ₹548 crore for 9MFY24 from ₹404 crore for 9MFY23. Net interest income (NII) also saw a significant rise to ₹948.5 crore for 9MFY24, indicating robust financial health.
However, analysts caution that accurate information from borrowers and effective risk management are critical for sustained success. Any misrepresentation of data or failure to manage risks could adversely impact the company’s creditworthiness and overall business performance.