Business Overview -: Aadhar Housing Finance Limited
It is a retail-focused housing finance company that focuses on the low-income housing segment. The ticket sizes of loans is less than Rs. 15 lakh and average ticket size of loans is Rs. Rs.9 lakh, with an average LTV of 57.6 per cent and 58.1 per cent, as of Sep 30, 2022 and Sep 30, 2023. Their business approach is based on social aims, with a financially inclusive, customer-centric loan business that significantly contributes to the economic uplift of our target consumers by raising their standard of life. As of September 30, 2023, Aadhar Housing had a large network of 471 branches, including 91 sales offices, distributed over 20 states and union territories, serving roughly 10,926 pin codes in India.
Since June 2019, BCP Topco, which is the promoter, and is an affiliate Blackstone Group Inc, currently, holds 98.7% of our pre-Offer issued. As of March 2023, UP, Maharashtra, Gujarat, and Rajasthan accounted for more than 60% of their respective states' AUM. The Low Income Group accounts for 47%, the Middle Income Group for 18.4%, and the Economically Weaker Section for 28.1% of gross AUM.
IPO Objectives -: Aadhar Housing Finance
Aadhar Housing Finance IPO issue has both OFS and fresh issue. Fresh issue has two objectives. Out of Rs. 1000 cr fresh issue, Rs 750 cr will be used to meet future capital requirements towards onward lending and rest of the fund from fresh will be used for general corporate purposes and towards meeting the expenses incurred for floating the IPO. Through IPO, the company will get a boost on its brand value and benefits of listing on stock exchange.
IPO Details -: Aadhar Housing Finance:
| IPO Open Date | May 8, 2024 |
| IPO Close Date | May 10, 2024 |
| Basis of Allotment | May 13, 2024 |
| Listing Date | May 15, 2024 |
| Face Value | Rs 10 per share |
| Price | ₹300 to ₹315 per share |
| Lot Size | 47 Shares |
| Total Issue Size | 95,238,095 shares |
| (aggregating up to ₹3,000.00 Cr) | |
| Fresh Issue | 31,746,032 shares |
| (aggregating up to ₹1,000.00 Cr) | |
| Offer For Sale | 63,492,063 shares |
| (aggregating up to ₹2,000.00 Cr) | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Size, Price & Launch Date -: Aadhar Housing Finance IPO
As per DRHP filed with the SEBI, the company will raise a total of Rs. 3000 cr through both an OFS and a fresh issue. The offer is made up of a fresh issue worth Rs. 1000cr and an offer for sale worth Rs. 2000cr by the company's promoter. IPO will open from May 8, 2024 to May 10, 2024. The price band of Aadhar Housing Finance has been set at Rs. 300 to Rs. 315.
Financial Statements -: Aadhar Housing Finance
| Particulars (Rs in Million) | FY24 (6M) | FY23 (6M) | YoY (%) | FY23 | FY22 | FY21 | CAGR |
| Revenue from Operations | 12219.7 | 9498.5 | 28.6% | 20432.3 | 17282.7 | 15753.3 | 13.9% |
| Other Income | 1.2 | 0.2 | 2.9 | 2.9 | 2.2 | ||
| Total Income | 12220.9 | 9498.7 | 28.7% | 20435.2 | 17285.6 | 15755.5 | 13.9% |
| Operational Expenses | 3157.8 | 963.0 | 3712.2 | 2969.0 | 2437.5 | ||
| Other expenses | 770.3 | 582.4 | 1358.0 | 898.5 | 721.3 | ||
| EBITDA | 8292.8 | 7953.3 | 4.3% | 15365.0 | 13418.1 | 12596.7 | 10.4% |
| EBITDA Margin% | 67.86% | 83.73% | 75.20% | 77.64% | 79.96% | ||
| Depreciation | 97.7 | 78.8 | 164.9 | 132.5 | 111.9 | ||
| Interest | 3790.9 | 4739.7 | 7991.9 | 7612.0 | 8159.7 | ||
| Profit Before Tax | 4404.2 | 3134.8 | 40.5% | 7208.2 | 5673.6 | 4325.1 | |
| Exceptional items (net) | - | - | 250.0 | - | - | ||
| Total tax | 968.1 | 680.4 | 1510.6 | 1225.1 | 923.8 | ||
| Profit After Tax | 3436.1 | 2454.4 | 40.0% | 5447.6 | 4448.5 | 3401.3 | 26.6% |
| PAT Margin% | 28.12% | 25.84% | 26.66% | 25.74% | 21.59% | ||
| EPS Diluted (Rs) | 8.50 | 6.00 | 13.40 | 10.90 | 8.40 |
Source: DRHP
Financial Performance -: Aadhar Housing Finance
- AUM has increased from Rs.13,327cr in FY21 to Rs.17,222.83 cr in FY23.
- Revenue from operation has increased from Rs. 1,575.3 cr in FY21 to Rs. 2,043.2 cr in FY23. Net interest margin rose from 5.8% in FY21 to 8.0% in FY23. Interest income rose from Rs. 1426.9 cr in FY21 to Rs. 1776.2 cr in FY23.
- Average cost of borrowing has fallen from 8.2% in FY21 to 7.0 in FY23 but cost to income ratio has been rising y-o-y from 35.8 per cent in FY21 to 38.1 per cent in FY23. Finance cost has come down marginally from Rs.815.9cr in FY21 to Rs. 799.1 cr in FY 23.
- GNPS in FY21, FY22 and FY23 were Rs.143cr, Rs.216.3cr and Rs.199.7cr, whereas Net NPA for same period was Rs.99.6cr, Rs.160.8cr and Rs.144 cr.
- The company had 78% of borrowing through floating rate instrument as of Sep 30, 2023, compared to 75% floating rate borrowing as of March 31, 2023. The company gets its finances from 3 primary sources i.e. Banks, NHB and Redeemable Non-Convertible Debentures Secured. Banks funding has been kept stable from last 3 fiscal years, rise was seen in financing from NHB from Rs. 1,698.0cr in FY21 to Rs 3,002.06cr FY23.
| Metrics | Financial Year ended March 31, 2021 | Financial Year ended March 31, 2022 | Financial Year ended March 31, 2023 |
| Live Accounts (including assigned and co-lent loans)(1) | 182471 | 204135 | 233228 |
| Number of branches and sales offices(2 | 310 | 332 | 469 |
| Average ticket size | 0.9 | 0.9 | 0.9 |
| Retail AUM | 133252.2 | 147766.9 | 172228.3 |
| Gross Retail NPA (%) | 1.10% | 1.50% | 1.20% |
| Net Retail NPA to Retail AUM (%)(6) | 0.70% | 1.10% | 0.80% |
| Net Worth(7) | 26927.6 | 31466.3 | 36976 |
| Average yield on Gross Loan Book (%)( | 13.20% | 12.80% | 12.80% |
| Average cost of Borrowing (%)(14) | 8.20% | 7.20% | 7.00% |
| Net Interest Margin (%)(15) | 5.80% | 6.90% | 8.00% |
| Cost to Income Ratio (%)(16 | 35.80% | 36.30% | 38.10% |
Promoters & Shareholding -: Aadhar Housing Finance
BCP Topco is the majority shareholder and also a promoter of the company. BCP Topco holds somewhere around 98% of Aadhar Housing Finance, while ICICI Bank Limited, who is a minority shareholder holds 1.18% in the company.
| S. No. | Name of the Shareholder | Number of Equity Shares Held | % of the Equity Share Capital |
| BCP Topco | 38,96,83,420 | 98.72% | |
| ICICI Bank Limited | 46,50,000 | 1.18% | |
| Total | 39,43,33,420 | 99.90% |
Source: DRHP
Why should you invest in Aadhar Housing Finance IPO?
Either applying with small subscription money or bidder for greater number of shares, one should check company’s fundamentals that help to know its financial performance and competitive strength that drives its business growth. Fundamental analysis apart from financial and competitive strength, also help you to know the risk factors that can affect the business operations and future prospects of the company. After evaluating the variables such strength weakness, financials, you may strike a balance and decide to invest or not invest in an IPO.
Also Read: Difference Between Fundamental Analysis and Technical Analysis
In a listed company, apart from fundamental analysis, you can also perform the technical analysis, which also helps to know the share price valuation and movement as per the performance of the company. However, for an unlisted company, or company that introduced the IPO, you have only options to analyse the fundamentals of the company and compare the share price valuation from its listed peer group companies.
Competitive Strengths -: Aadhar Housing Finance
- Aadhar Housing Finance is more focused on the low-income housing segment and has a ticket size of less than Rs 1.5 million in India. With the highest AUM and net worth among its analyzed peers in six months that ended September 30, 2023, it is one of the leading housing finance banks for low-income people.
- The bank is operating through various business cycles and has leveraged its business to (i) the inherent strength of its customer-centric business model, (ii) its extensive branch and sales office network, and (iii) the expertise of our professional management team to focus on the low-income housing segment.
- The bank has a pan India presence with 469 and 471 branches (including 94 and 91 sales offices network, respectively) across India covering 20 states and union territories of India.
- Further, as a strategic growth plan, AHF is looking to expand its distribution network to achieve deeper penetration in key states with lower incremental costs to drive efficiency and profitability.
- To grow its customer base AHF is focused on growing the share of the low-income housing segment mortgage market in India and continuing to focus on low income group of people like salaried, economically weaker and middle income group of the country.
- To improve the customer experience and improve cost efficiency Aadhar Housing Finance continues to invest in and roll out digital and technology-enabled solutions across its business.
- To reduce operating expenses and optimize the borrowing costs it will continue to diversify the funding sources, implement robust asset liability management policies and do strategic investments in technology and digitization across our business that will also reduce its credit costs over time.
- The financial performance of the AHF is also encouraging, as the revenue and EBITDA have grown at CAGR of 14% and 10.4% respectively from FY21 to FY23. The PAT has shown a better growth of CAGR of 26.6% due to improved PAT margin during the same period.
Risk factors -: Aadhar Housing Finance
- Loan and financing in India are highly regulated by the central bank, AHF also has to comply with stricter regulations and guidelines issued by regulatory authorities like NHB and RBI, this may attract penalties or increase compliance costs and disturb the business operations.
- As per the DRHP, the Promoters of the company are subject to certain ongoing regulatory investigations by enforcement agencies including the ED and any unfavourable outcome of such investigations may have negative impact on the share price of the company.
- The company, Aadhar Housing Finance is also involved in certain legal proceedings and any adverse outcome in these or other proceedings may adversely affect its business.
- Loaning and financing are some of the highest risky businesses, hence failure to identify, monitor and manage risks and effectively implement its risk management policies, could have a material adverse effect on its business operations and the financial condition of the company.
- The bank is also vulnerable the volatility in interest rates and it may face interest rate and maturity mismatches between the assets and liabilities may cause liquidity issues.
- Any increase in the levels of non-performing assets in the AUM, for any reason whatsoever, would adversely affect the business operations and financial condition of the company.
- Considering the financial performance of the AHF the revenue and net profit have grown but the operating margins of the bank consistently declined from 80% to 68% during FY21 to FY23.
How to Apply for Aadhar Housing Finance IPO?
If you want to apply in the Aadhar Housing Finance IPO you need a trading account and demat account. If you don’t have you can apply here at Moneysukh, with lowest brokerage charges demat account and various other additional features to trade in equities, commodities and currency market.
Also Read: Equity or Commodity which is better for Trading or more Profitable
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Steps to Apply for Aadhar Housing Finance IPO:
Step 1: As soon as the bidding for the Aadhar Housing Finance IPO starts you can apply.
Step 2:Just browse trade.moneysukh.com and log in with your User ID & password.
Step 3:Now go to the IPO section and click on the Aadhar Housing Finance IPO.
Step 4:Here you have to fill the required details like price, quantity, and so on.
Note: While applying in any IPO, make sure bid at the cutoff price and then submit your application.
Step 5:Now before submitting your IPO application make the required payment and then submit.
How to Check Aadhar Housing Finance IPO Allotment Status?
The basis of the allotment in the IPO starts once the online bidding is closed. And allotment procedure is followed as per the oversubscription of the IPO. If the IPO is oversubscribed, then for every individual there is less of getting shares in the allotment. However, you can increase your chances of allotment in the IPO, if at the time of applying in retail category or HNI category you follow tips and tricks.
Also Read: How to improve Allotment chances: 15 Tips for investing in IPO
Anyway, if owing to high demand of shares the IPO of Aadhar Housing Finance is oversubscribed and you don’t get allotment of any share, then your money will be returned back into your bank account or the fund will be unblocked if applied through the ASBA process. Though, if you get the allocation of any shares in the allotment, then the shares will be credited into your demat account before the listing day.
Also Read: How to check IPO allotment status on NSE, BSE through Moneysuk
