Aadhar Housing Finance’s IPO begins today: GMP, subscription status, review, and other information. Apply or not?


The Aadhar Housing Finance IPO, backed by Blackstone, commenced its subscription today, May 8, with closure slated for May 10. Priced between ₹300 to ₹315 per share, the IPO aims to raise capital for expansion and strategic initiatives. Notably, it garnered ₹898 crore from anchor investors on May 7, showcasing strong initial interest. Investors can bid for multiples of 47 shares, with the minimum bid set at 47 shares. This pricing strategy aims to attract diverse investor participation while ensuring accessibility for individual investors. The IPO’s timing aligns with favorable market conditions, capitalizing on investor sentiment and demand for opportunities in the housing finance sector. Aadhar Housing Finance’s association with Blackstone, a renowned global investment firm, adds credibility and investor confidence to the offering. With the IPO period spanning three days, prospective investors have ample time to analyze the company’s fundamentals and make informed investment decisions. Overall, the Aadhar Housing Finance IPO presents an enticing opportunity for investors seeking exposure to India’s growing housing finance market.

Retail investors would receive 35% of the issue size from the Aadhar Housing Finance IPO, followed by non-institutional investors (NIIs) at 15% and qualified institutional buyers (QIBs) at 50%. Employees of the company are eligible for a discount of ₹23 per share.

Founded in 2010, Aadhar Housing loan Limited is a housing loan company that focuses on lower income people.

The deep impact branches’ sales offices are aimed at customers in India’s tier 4 and tier 5 towns.

As of September 30, 2023, the company employed 12,221 Aadhar Mitras, who receive referral payments in exchange for helping their clients find loans.

The company provides a variety of mortgage financing choices for the construction, remodeling, and acquisition of residential and commercial real estate.

As of September 30, 2023, the company operated a vast network of 471 branches, including 91 sales offices. These branches and sales offices are spread across 20 states and union territories, providing service to about 10,926 pin codes in India.

Aavas Financiers Ltd (P/E of 28.1), Home First Finance Company India Ltd (P/E of 34.9), Aptus Value Housing Finance India Ltd (P/E of 31.3), and India Shelter Finance Corporation Ltd (P/E of 33.1) are Aadhar Housing Finance’s listed peers, according to the Red Herring Prospectus (RHP).

Aadhar Housing Finance Limited saw a 22.22% increase in profit after tax (PAT) and an 18.22% increase in revenue between March 31, 2022, and March 31, 2023.

Aadhar Housing Finance IPO details

An OFS (offer for sale) for ₹2,000 crore made by promoter BCP Topco VII Pte Ltd, an affiliate of the Blackstone Group, and a new issuance of equity shares priced at ₹1,000 crore comprise Aadhar Housing Finance’s ₹3,000 crore initial public offering.

The OFS’s promoter, BCP Topco VII Pte, will sell its stake. BCP Topco, the promoter and affiliate of Blackstone funds, now owns 98.7% of the pre-offer issued, subscribed, and paid-up equity share capital.

The company intends to fulfill future capital requirements for additional lending as well as use the net proceeds for general corporate operations.

SBI Capital Markets Limited, ICICI Securities Limited, Kotak Mahindra Capital Company Limited, Nomura Financial Advisory and Securities (India) Pvt Ltd, and Citigroup Global Markets India Private Limited are the lead managers for the book running. Kfin Technologies Limited is serving as the registrant for this issuance.

The brokerage stated that it expects increased operational performance over time, primarily due to the domination of the low-income housing category, low borrowing rates, and higher peer return ratios. They consider the stock’s pricing, which is higher than its competitors at Rs. 315 and 3.1x P/BVPS on FY23 book value, to be appropriate. The brokerage advises ranking the issue as SUBSCRIBE as a result.

Swastika Investmart Ltd

According to the brokerage, there are a few noteworthy challenges that should be carefully taken into account. Aadhar is subject to inherent risks due to the creditworthiness of its low-income consumers and the increase of non-performing assets (NPAs). In addition, the company operates in a highly competitive industry and deals with lending rate volatility.

Aadhar’s IPO values of 22.8x P/E and 3.36x P/BV appear reasonable, but given the company’s heavy reliance on borrowing, care must be taken. Because of this, the brokerage only suggests this IPO to high-risk investors seeking for long-term exposure to the affordable housing market.

Aadhar Housing Finance IPO GMP today

The IPO GMP for Aadhar Housing Finance is +70. According to investorgain.com, this shows that the price of Aadhar Housing Finance shares were selling at a premium of ₹70 on the black market.

Aadhar Housing Finance shares are expected to list at ₹385 a share, 22.22% higher 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.

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