Aptus Value Housing Finance India IPO: Price, GMP, Company Financial, Should you Buy?

Aptus Value Housing Finance Limited opened its initial public offering (IPO) on August 10. The issue is set to stay open for three days, upon which it will close on August 12, 2021. The Aptus Value Housing Finance IPO has seen no update as such to the grey market premium (GMP) price for the issue, though this could change over the course of the week as the issue wraps up its subscriptions and trading. At present, the GMP is listed as Rs 0.

The price band of the IPO stands at Rs 346 to Rs 352 per equity share with a Rs 2 per equity share face value. The public issue has a minimum lot size of 42 shares that has a cut-off application amount of Rs 14,826. On the higher end of the lot size, there are 546 shares with a maximum application amount of Rs 192,738.

The Aptus Value Housing Finance IPO carries an issue size of Rs 2,780 crore, which consists of a fresh issue and an offer for sale (OFS). The fresh issue aggregates up to Rs 500 crore, while the OFS aggregates to Rs 2,280.05 crore with an equity share of 64,590,695 shares. The objective of the issue is to augment the company’s capital base to meet future capital requirements. Part of the funds that are garnered from the issue will be directed towards expenditures. The overall goal of the issue is to achieve share listing benefits on the stock exchanges.

Speaking on some of the noteworthy highlights of the company, AngleOne said, “As of December 2020, Aptus Value’s total assets under management stood at Rs. 37.91 billion. It had more than 180 branches. Aptus Value Housing finance reported a loan book of Rs. 4,000 crores as of December 2020. As per CRISIL, in FY2020, Aptus Value recorded a ROA of 6.3% owing to an optimal product mix and prudent cost control measures. During the same period, this company recorded the lowest cost to income ratio in the industry (26.4%). Both these figures were the highest among its peers. This company has raised a total of $193.7 million over 3 funding rounds.”

Aptus Value Housing is a retail-focused finance company that caters mainly to low to middle-income self-employed customers that reside in rural and semi-urban markets of India. The company offers home loans to retail customers so that they can purchase homes as well as construct residential properties, improve housing and extensions and so on. The company also offer them loans against property and business loans. Aptus Value Housing provides a wide range of services to its customers. These services include sourcing, underwriting, valuation, and 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 the assets under management. As of December 31, 2020, 99.42 per cent of the assets under management were from customers belonging to the low and middle-income group with a monthly income of less than Rs. 50,000.

Should you Subscribe to Aptus Value Housing Limited IPO?

The company’s assets under management have grown at a compounded annual rate (CAGR) of 34.5 per cent, which has left it at Rs 4,068 crore. The company also has the largest self-employed customer portfolio as 73 per cent of its borrowers are self-employed. Another 66 per cent fall un the low-income group while 41 per cent are new to the credit.

The risk that comes with this company is that such a large part of the lender’s portfolio consists of self-employed persons who have seen a significant default in the peak pandemic times. The other concern is that the new-to-credit borrowers also make up a large chunk of the company profile.

Speaking on the public issue of the company, AngleOne further added, “Aptus has posted strong growth in both NII and net profits of 46.2% and 54.7% between FY19-FY21. Despite the Covid-19 crisis the company’s asset quality has remained largely stable with GNPA and NNPA largely stable at 0.6% and 0.5% respectively at the end of FY2021. At the higher end of the price band the stock would be trading at P/BV of 8.5x FY21 BVPS of Rs. 41.7 which is in line with Aavas Financers which is a comparable company. Given strong growth prospects, and industry leading return ratios we recommend a SUBSCRIBE rating on the issue.”

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