Aadhar Housing Finance IPO: Issue subscribed 25.49 times on day 3, QIB portion booked 72 times; Check GMP, other details

The IPO got bids for 1,78,65,45,247 shares against 7,00,89,373 shares on offer, as per BSE data. The Aadhar Housing Finance IPO had a slow start on the first day, with only the employee portion being fully booked. Aadhar Housing Finance IPO subscription status was 44 per cent on day one. The retail investors portion got booked at 41 per cent, while the portion for NIIs received a 60 per cent subscription. The quota for QIBs was booked at 33 per cent on day one.

On the second day of the issue, Aadhar Housing Finance IPO received a subscription of 1.48 times. The quota for NIIs received 1.94 times subscription while retail investors category got subscribed 94 per cent. The portion for QIBs fetched a subscription of 2.05 times, according to BSE.

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Aadhar Housing Finance IPO details

Aadhar Housing Finance’s ₹3,000 crore initial public offering consists of an OFS (offer for sale) by promoter BCP Topco VII Pte Ltd, a Blackstone Group affiliate, for ₹2,000 crore and a fresh issue of equity shares valued at ₹1,000 crore. There is a minimum bid of 47 shares and bids can be made for multiples of 47 shares.

The OFS’s promoter, BCP Topco VII Pte, will sell its stake. BCP Topco, the promoter and affiliate of Blackstone funds, now owns 98.7 per cent of the pre-offer issued, subscribed, and paid-up equity share capital.

The subscription period for the Aadhar Housing Finance IPO began on Wednesday, May 8, and closed on Friday, May 10. The Blackstone-backed company’s initial public offering price band was set at ₹300 to ₹315 per share. Tuesday, May 7, saw the Aadhar Housing Finance IPO raise Rs. 898 crore from anchor investors.

Retail investors has been allocated 35 per cent of the issue size from the Aadhar Housing Finance IPO, followed by NIIs at 15 per cent and QIBs at 50 per cent. The employees of the firm are eligible for a discount of ₹23 per share.

Arun Kejriwal, the founder of Kejriwal Research and Investment Services, claims that the business was purchased from the DHFL group after they went bankrupt in the years between 2016 and 2017.

While the organisation was dealing with a number of challenges, the firm that was bought was spotless and had no issues. The firm is a house finance company that caps ticket sizes at ₹15 lakh and focuses on the low-income housing market.

Also Read: Aadhar Housing Finance IPO: Blackstone-backed IPO mobilises ₹898 crore from anchor investors ahead of subscription

According to Kejriwal, the company’s EPS for the year ending March 2023 was ₹13.8, or ₹13.4 on a fully diluted basis. The diluted earnings issue falls between the 22.4–23.5 PE range. As of December 23, the company’s net asset value is ₹107.6. At the top of the range, the price to book at this NAV is 2.92.

The NAV would increase to ₹123.07 at the top of the band based on the post-issue, and the ratio would remain at 2.56 times the price to book. This performed exceedingly well in comparison to the peer group. In the medium to long term, there is profit to be earned from this situation. Arun is of the opinion that there would also be some listing pop.

The firm intends to fulfill future capital requirements for more lending as well as use the net proceeds for general corporate operations. 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 are the lead managers for the book running. Kfin Technologies Limited is serving as the registrar for this issue.

Aadhar Housing Finance IPO Review

Swastika Investmart Ltd

Aadhar Housing Finance is a leading HFC with the highest AUM in its low-income segment. The company boasts a robust and extensive branch network, efficient systems, and access to diversified, cost-effective long-term financing. Its strong financial performance reflects consistent growth over the years.

However, some key challenges require careful consideration. Aadhar faces inherent risks associated with the creditworthiness of its low-income clientele and increases in NPAs. Additionally, the company operates in a highly competitive industry and is susceptible to interest rate volatility.

While the IPO valuation of 22.8x P/E and 3.36x P/BV might appear fair, Aadhar’s high reliance on borrowing necessitates a cautious approach. Therefore, we recommend this IPO only for high-risk investors seeking long-term exposure to the affordable housing sector.

Also Read: Aadhar Housing Finance IPO: Issue subscribed 1.48 times on day 2, retail portion booked 94%. Check GMP, other details.

Aadhar Housing Finance IPO GMP today

Aadhar Housing Finance IPO GMP is +71. This indicates Aadhar Housing Finance share price were trading at a premium of ₹71 in the grey market, according to investorgain.com.

When the upper end of the IPO pricing range and the present premium on the grey market are taken into consideration, it is projected that Aadhar Housing Finance shares will list at a price of ₹386 a share, which is 22.54 per cent more than the IPO price of ₹315. ‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 10 May 2024, 10:33 PM IST