Issue Date:?25th Sept ? 27th Sept 2018
Price Band(Rs):?818-821 |??Lot Size (No. of Share):?18
Company Background
Incorporated in 2011, Jaipur based Aavas Financiers Ltd is engaged in providing retail, affordable housing finance of low and middle income self employed customers in semi-urban and rural areas in India. The company is registered with the NHB as an HFC. According to ICRA Report, company had the lowest gross NPAs as of March 2018 and the second highest growth rate of assets under management for the last three financial years, among affordable housing finance companies that had assets under management between Rs 2,500 crore and Rs 20,000 crore.
Issue Details
| Issue Opens | 25-Sept-18 |
| Issue Closes | 27-Sept-18 |
| Issue Size(Rs in Crore) | 1734.07 |
| Face value(per equity share) | 10 |
| Price Band(Rs.) | 818-821 |
| Lot Size(No of Share) | 18 |
| No of Shares on Offer(Crore) | 2.11 |
| QIB(%) | 50% |
| Non-Institutional(%) | 15% |
| Retail(%) | 35% |
| Commencement of Trading | 08-Oct-18 |
Strengths
- Strong distribution network with deep penetration serving under served customers in rural and semi-urban markets.
- In-house sourcing model leading to superior business outcomes.
- Robust and comprehensive credit assessment, risk management and collections framework of this company.
- Effective use of technology and analytics to build a scalable and efficient operating model of this company.
Concerns
- Higher exposure to self-employed customers in low income group.
- Volatility in borrowing and lending rates.
- Difficulty in attracting cost effective funding.
- Deteriorating credit quality of loans and higher provisioning.
Our View
On upper price band of Rs 821 and EPS of Rs 15.87, P/E works out to be 51.7x. On last 3 years average consolidated EPS of Rs 13, P/E works out to be 63.1x. Means company is having P/E in between 51.7x to 63.1x for the upper price band of Rs 821. Its listed peers? like Gruh Finance is trading at P/E of 32x (Highest) and Canfin Homes at P/E of 13.6x (Lowest) and Industry average is 21x. Considering this, Aavas Financiers IPO is highly priced.
Aavas Financiers has strong revenue growth and its margins are on improvement mode. However, the issue price is highly priced, thereby leaving little scope for listing gains. Considering the future business potential, high growth, strong NIM and reasonable asset quality. High risk investors can invest in this IPO from a long term perspective. Investors may or may not get listing gains.
Aavas Financiers Ltd Allotment Status Online
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