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Review By Rudra Shares & Stock Brokers Ltd on September 25, 2018
THE OFFER
Issue Open: 25 Sep 2018 to 27 Sep 2018
»» Issue Type: Book Built Issue IPO
»» Issue Size:
› 21,121,437 Equity Shares @ 10 aggregating up to Rs 1734.07 cr
› Offer for Sale of 16,249,359 Equity Shares
› Fresh Issue aggregating up to Rs 400 Cr
»» Face Value: Rs 10 Per Equity Share
»» Issue Price: Rs 818 - Rs 821 Per Equity Share
»» Market Lot: 18 Shares
»» Minimum Order Quantity: 18 Shares
»» Listing At: NSE, BSE
CAPITAL STRUCTURE
The share capital of Company is set forth below:- (Amount in Rs except share data)
Authorized Share Capital:- 85,000,000 Equity Shares @10 Aggregate value 850,000,000
Issued, subscribed and paid up capital before the Issue:- 70,750,891 Equity Shares @10 Aggregate value 707,508,910
Present Issue:-
21,121,437 Equity Shares @ 10 aggregating up to Rs 1734.07 cr
Offer for Sale of 16,249,359 Equity Shares
Fresh Issue aggregating up to Rs 400 Cr
OBJECT OF THE OFFER
The Offer comprises a Fresh Issue by Company and an Offer for Sale by the Selling Shareholders.
The proceeds of the offer for sale will go to Shareholders after deducting their portion of the Offer related expenses and relevant taxes thereon. The company will not receive anything from the proceeds of the Offer for Sale.
The Net Proceeds of the Fresh issue will be utilized towards augmenting capital base to meet future capital requirements arising out of growth in business.
COMPANY OVERVIEW
Aavas financiers is a retail housing finance company, primarily serving low and middle income self employed customers in semi-urban and rural areas in India.
As of March 31, 2018, Company conduct its operations through 165 branches spread across 92 districts in 8 states with strong presence in the four states of Rajasthan, Gujarat, Maharashtra and Madhya Pradesh.
According to ICRA Report, Company had the lowest GNPAs as of March 31, 2018 and the second highest growth rate of AUM for the last 3 financial years, among affordable housing finance companies that had AUM between Rs 25 billion and Rs 200 billion.
As of March 31, 2018, 60.40% of Gross Loan Assets were from customers who belonged to the economically weaker section and low income group, earning less than Rs 50,000 per month and 34.76% of Gross Loan Assets were from customers who were new to credit.
ROAD MAP AHEAD
Company objectives are to expand their market share and aim to accomplish this through the following strategies:
STRENGTHS
FINANCIAL HIGHLIGHTS
Total Revenues stood Rs 457.2cr, Rs 305.4cr and Rs 190.8cr, in Fiscal 2018, Fiscal 2017 and Fiscal 2016 respectively.
PAT was Rs 92.9cr, Rs 57.1cr and Rs 32.7cr, in Fiscal 2018, Fiscal 2017 and Fiscal 2016 respectively.
Net Interest margin was 7.25%, 6.61% and 6.10% in Fiscal 2018, Fiscal 2017 and Fiscal 2016 respectively.
As of & for the year ended March 31, 2018, Total Borrowings were Rs 2595.78cr and average cost of borrowings has reduced from 12.28% as of March 31, 2014 to 8.65% as of March 31, 2018.
As of March 31, 2018, the weighted average duration of outstanding borrowings, including securitization and assignment was 135.35 months.
RISK FOR THE BUSINESS
Aavas financiers is a retail housing finance company, primarily serving low and middle income self employed customers in semi-urban and rural areas in India.
On the upper price band of Rs 821 with EPS of Rs 13.27 for FY18, P/E works out at 61.86x. Issue seems to be highly priced.
Moreover, taking into consideration, Companies operations concentrated in four states of western India, particularly Rajasthan, Company requires substantial capital, operational & credit risks and inability to expand business into new regions. Based on the above aspects, we recommend to "AVOID" the issue.
Review By Rudra Shares & Stock Brokers Ltd on September 25, 2018
Rudra Shares & Stock Brokers Ltd.
Rudra Shares & Stock Brokers Ltd. is Kanpur based brokerage houses offering services to Retail and HNI customers. Rudra Shares offer a range of financial services which includes institutional and retail brokerage of Equity, Currency, Commodities, Derivatives, Online Trading, Depository Services, Fixed Deposits, IPOs and Mutual Funds Distribution, Wealth Advisory and Research.
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