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Another Huge Blow to IPO listig as Aptus Value Housing Finance list at 6% lower than its subscription price!!

Aug 24, 2021

Aptus Value Housing Finance India shares made a weak debut as the stock listed at a 6.5 percent discount to issue price of Rs 353 per share. The stock opened at Rs 329.95 on the BSE and at Rs 333 on the National Stock Exchange.

The initial public offering of the retail-focussed housing finance company saw a healthy subscription of 17.20 times during August 10-12, which was much better than Chemplast Sanmar, which has also listed today.

The offer was largely supported by institutional and non-institutional investors as portions reserved for them were subscribed 32.41 times and 33.91 times, respectively. The retail portion was booked 1.35 times.

The company raised Rs 2,780 crore through its public issue that consisted of a fresh issue of Rs 500 crore and the remaining Rs 2,280 crore by existing shareholders. The net proceeds from fresh issue will be utilised for augmenting the company’s tier 1 capital requirements.

Incorporated in 2009, Aptus Value Housing Finance India is an entirely rural focused housing finance company primarily serving low and middle income self-employed customers in the rural and semi-urban markets of India. It is one of the largest housing finance companies in south India in terms of assets under management (AUM), as of Q4FY21

Its gross loan assets have grown at a CAGR of 34.54 percent during FY19-FY21. As of FY21, they conduct the operations in the states of Tamil Nadu (including the union territory of Puducherry), Andhra Pradesh, Karnataka and Telangana through 190 branches

All the brokerage houses advised subscribing the public issue for long term citing superior return ratios, growth and past financials, though it was fully priced and there was weakening asset quality due to second Covid wave.

“At the higher price band, Aptus demands a price-book (P/B) multiple of 7.06 (at post issue BV) and is fully priced thus leaving less on the table for listing gains. However, given the growth and past financials, long term investors can ‘subscribe’ the issue,” said Ashika Stock Broking.

Antique Stock Broking also said valuations at 5.4x on post-money book and 45x on FY23e earnings did not leave much upside in the near term. Investors with long term outlook can look to subscribe, the brokerage advised.

Antique Stock Broking said affordable housing finance became the buzz word over the last decade and more than a dozen new age housing finance companies (HFCs) commenced business to tap this huge opportunity. “However, the difficult nature of the business ensured that very few have seen reasonable scale & success.”

While the progress in affordable housing in India has been rather slow, with total outstanding loans at mere Rs 88,000 crore (3 percent of mainstream housing), Aptus has crafted its own success story through a combination of identifying the right customer profile, the right collateral and heavy usage of analytics, systems and process, said the brokerage.

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(With Inputs from Moneycontrol)

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