The Aadhar Housing Finance IPO, supported by Blackstone, began its public offering on a subdued note with only the employee portion fully subscribed on the initial day. The overall subscription status by the end of day one stood at 44%. Retail investors showed moderate interest with a 41% subscription rate, non-institutional investors participated more actively with a 60% subscription, and qualified institutional buyers (QIBs) were the least engaged, subscribing to just 33% of their quota.
Aadhar Housing Finance IPO Schedule and Financials
The subscription window for the Aadhar Housing Finance IPO opened on Wednesday, May 8, 2024, and is scheduled to close on Friday, May 10, 2024. The price band for the IPO is set between ₹300 and ₹315 per share. In a significant pre-IPO activity, the company managed to raise ₹898 crore from anchor investors on Tuesday, May 7, 2024. Investors are required to bid for a minimum of 47 shares, and subsequent bids can be made in multiples of 47 shares.
Allocation and Investment Insights
Retail investors have been allocated 35% of the total issue size, non-institutional investors have a 15% allocation, and the remaining 50% is reserved for qualified institutional buyers. An additional perk for employees is a discount of ₹23 per share. Arun Kejriwal of Kejriwal Research and Investment Services highlights that Aadhar Housing, originally part of the DHFL group which faced bankruptcy issues between 2016 and 2017, was acquired in a clean state and has been focusing on the low-income housing sector with loan caps at ₹15 lakh.
Financial Performance and Valuation
For the fiscal year ending March 2023, the company posted an earnings per share (EPS) of ₹13.8, or ₹13.4 on a fully diluted basis. With the IPO priced at the upper band, the price-to-earnings (PE) ratio ranges between 22.4 and 23.5, and the price-to-book (P/B) ratio post-issue stands at 2.56, which is competitive when compared to industry peers. Kejriwal suggests that the stock could offer medium to long-term gains and expects a potential “listing pop” due to its solid fundamentals and strategic market positioning.
Aadhar Housing Finance IPO Details
The ₹3,000 crore IPO comprises a ₹2,000 crore offer for sale (OFS) by its promoter BCP Topco VII Pte Ltd, an affiliate of Blackstone Group, and a fresh issue of equity shares amounting to ₹1,000 crore. The proceeds from the fresh issue are earmarked for future capital requirements to augment the lending business and for general corporate purposes.
The lead managers for this IPO include 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. Kfin Technologies Limited is the registrar for the issue.
Review and Recommendation
Canara Bank Securities notes that despite legal challenges amounting to ₹269 crores which could impact financials, the IPO is attractively priced at a P/B of 3.36x. The brokerage commends the company’s strategic operations for maintaining high asset quality and improving net interest margins since Blackstone’s takeover in 2019. It recommends subscribing to the IPO for potential listing gains, citing the company’s robust management and promising market strategy.
In summary, the Aadhar Housing Finance IPO presents an interesting opportunity for investors, combining a solid backing by Blackstone with a strategic focus on low-income housing finance. Potential investors are advised to consider both the immediate listing potential and the company’s long-term growth prospects in the evolving financial landscape.
FAQs
Here are five frequently asked questions (FAQs) about the Aadhar Housing Finance IPO, providing detailed answers for potential investors:
1. What is the price range for the Aadhar Housing Finance IPO?
The price band for the Aadhar Housing Finance IPO is set between ₹300 and ₹315 per share. This range allows investors to decide how much they are willing to invest based on their budget and the perceived value of the company’s shares.
2. How can I participate in the Aadhar Housing Finance IPO?
To participate in the IPO, investors need to:
- Visit their broker’s platform or website where they manage their investment portfolio.
- Find the section dedicated to IPO applications.
- Enter the number of shares they wish to purchase, adhering to the minimum bid of 47 shares and multiples thereof.
- Submit their application within the IPO window, from May 8, 2024, to May 10, 2024.
3. When will the Aadhar Housing Finance IPO results be announced?
The results of the IPO subscription, including the final allocation of shares, are typically announced a few days after the closing date of the IPO. Investors should monitor the official website cgbse.nic.in or their broker’s platform for the announcement.
4. What are the investment risks associated with the Aadhar Housing Finance IPO?
Investing in any IPO involves certain risks, such as market volatility and the potential for not receiving the desired number of shares. For Aadhar Housing Finance, specific risks include the company’s past association with the DHFL group and ongoing legal challenges that might impact its finances. Investors should review the company’s prospectus in detail and consider their risk tolerance before investing.
5. What should I do if I receive fewer shares than I applied for in the IPO?
It is common for oversubscribed IPOs to result in allotments of fewer shares than requested. If you receive fewer shares than you applied for, the excess funds paid will be refunded to your account. You can choose to keep the shares allocated or consider purchasing more on the open market once the company is publicly listed.