IPO analysis: Aptus Value Housing Finance India Ltd
IPO rating: Invest for long-term
About the issue:
Aptus Value Housing is a retail-focussed housing finance company. The company is coming out with its initial public offering (IPO) of equity shares with a face value of Rs 2 per equity share. The issue size of the company is Rs 2,780.05 crore, with a fresh issue comprising Rs 500 crore while the remaining include the sale of shares worth Rs 2,280.05 crore by existing investors, according to its red herring prospectus. The price band of the issue has been fixed at Rs 346 to Rs 353 per equity share. The IPO opening date is August 10, 2021, while it will close on August 12, 2021. It will be listed on the Exchanges on August 24, 2021. The IPO market lot size is 42 shares. A retail-individual investor can apply up to a maximum of 13 lots (546 shares or Rs 1,92,738). The net proceeds generated from the IPO will be utilised to augment the company's capital base to meet future capital requirements, meeting issue-related expenditures and also, to achieve share listing benefits on the stock exchanges.
Aptus Value Housing Finance IPO details:
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IPO opening date
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August 10, 2021
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IPO closing date
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August 12, 2021
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Issue type
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Book built issue IPO
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Face value
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Rs 2 per equity share
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IPO price
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Rs 346 to Rs 353 per equity share
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Market lot
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42 shares
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Min. order quantity
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42 shares
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Listing at
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BSE & NSE
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Issue size
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[.] equity shares of Rs 2
(aggregating up to Rs 2,780.05 crore)
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Fresh issue
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[.] equity shares of Rs 2
(aggregating up to Rs 500.00 crore)
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Offer for sale
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6,45,90,695 equity shares of Ra 2
(aggregating up to Rs 2,280.05 crore)
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About the company:
Aptus Value Housing was incorporated in the year 2009. It is a retail-focussed housing finance company that primarily serves the low and middle-income self-employed customers in the rural & semi-urban markets of India. As per CRISIL report, it is one of the largest housing finance companies in South India in terms of AUM of 37,909.31 million as of December 31, 2020.
The company offers home loans to retail customers for purchasing homes, construct residential property, house improvement & extension, loans against property, and business loans. It undertakes all types of lending activities such as sourcing, underwriting, valuation along with a legal assessment of collateral, the credit assessment, and collection.
As of December 31, 2020, the total home loans accounted for 51.76 per cent of AUM. As of December 31, 2020, 99.42 per cent of the AUM was from customers belonging to the lower and middle-income group with a monthly income of less than Rs 50,000.
Competitive strengths:
One of the largest housing finance companies in South India in terms of AUM.
A strong network of 181 branches across 75 districts and union territory of Puducherry.
Presence in the large, underpenetrated market with strong growth potential.
Robust credit risk management from origination to collections leading to assure strong asset quality.
Established financial performance track record.
Company financials:
The assets under management of the company grew by 28 per cent YoY for the period ended FY21. The net profit has been growing at a CAGR of 30.55 per cent for the past two years.
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Amount (in Rs crore)
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31-Mar-21
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31-Mar-20
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Mar-19
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AUM
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4,067.76
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3,178.6
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2,247.2
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Total revenue
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655.2
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523.7
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337.1
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Profit after tax
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266.94
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211.01
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111.48
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Number of branches
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190
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174
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142
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Recommendation:
The company is present in large, underpenetrated markets with strong growth potential. It has robust risk management architecture from origination to collections, leading to superior asset quality. Due to domain expertise in the business model, it is difficult to replicate others in their geographies. The company has an established track record of financial performance with industry-leading profitability. It offers loans only to retail customers and does not provide any loans to builders or for commercial real estate and targets first-time homebuyers, where the collateral is a self-occupied residential property. The company does not provide any loans with a ticket size above Rs 25 lakh while the average ticket size of loans is around Rs 7 lakh; thus, lowering its concentration risk to a larger extent. Since its inception, the company has not restructured any loans or written off any loan's receivable and as of December 31, 2020, the company’s gross NPAs expressed as a percentage of gross loan assets was 0.77 per cent, which is much lower than other financial institutions. Tamil Nadu accounted for more than 53 per cent of the company’s AUM, followed by Andhra Pradesh (26.51 per cent). It intends to continue expanding its presence in an on-ground contiguous manner in order to achieve deeper penetration in these regions. Before setting up new branches, it conducts research and considers a number of factors such as regional demographics, level of urbanisation, and the competitive landscape. The company also intends to expand its branch network in large housing markets in the states of Maharashtra, Odisha & Chhattisgarh. Owing to the above reasons, we recommend investing in the company’s IPO for the long term.
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