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Aadhar Housing NCD offer review (Apply)

Aadhar Housing Finance Ltd Logo

•    AHFL is engaged in housing finance business.
•    Focus on affordable housing to middle class augurs well.
•    Wadhawan Global is the promoter.
•    Issue rated AA+ (Structured Obligation) by CARE and BWR.
•    It posted sudden jump in top and bottom lines for FY18

ABOUT COMPANY:
Aadhar Housing Finance Ltd. (AHFL) – (erstwhile known as DHFL Vysya Housing Finance Ltd.). It was incorporated in Bengaluru as Vysya Housing Finance Ltd. and subsequently changed its name to the current one. This company is promoted by Wadhawan Global Capital Ltd.

AHFL is a deposit taking housing finance company registered with the NHB and focused on providing affordable housing financing products for the EWS and LIG segment in India, in tier 2 to tier 4 cities and towns, to diverse customer groups with focus on salaried (both formal and informal) and self-employed (business and professional in formal and informal segments) home buyers. As on March 31, 2018, 38.92% of its portfolio falls under EWS segment, 42.92% under LIG segment and 18.16% segment under MIG. Salaried customers comprise 70.49%, 71.52% and 67.70% of AHFL's assets under management as at March 31, 2016, March 31, 2017 and March 31, 2018, respectively. Company also provides loan against property.

AHFL have a robust marketing and distribution network, with a presence across 272 branches across 20 states and union territories, comprising of 160 main branches, two small branches, 62 micro branches, 48 ultra-micro branches, one Corporate office and one registered office, as of March 31, 2018.

ISSUE DETAILS:
AHFL is coming out with its maiden debt offer for Rs. 500 cr. with a green shoe option of retaining additional subscription of Rs. 900 cr. resulting in total size of the issue at Rs. 1400 cr. It is offering Secured Redeemable NCDs of Rs. 1000 each. It has coupon rates ranging from 9.25% to 9.75%. It has tenures of 3 yrs, 5 yrs and 10 years. Interest payment will be either on Monthly or on Annual basis as per the choice of investors. Issue opens for subscription on 14.09.18 and will close on or before 28.09.18. Minimum application to be made is for Rs. 10,000/- (10 NCDs)  and in multiple of Rs. 1000 (1 NCD) thereon, thereafter.  Allotment will be done on 'First come – First served' basis. Although allotment of these NCDs will be available in demat or in physical mode, trading will take place only in demat mode.  Post allotment, NCDs will be listed on BSE. Funds mobilized by this issue will be used for onward lending, financing, repayment of interest and principle of certain loans and general corpus fund needs.

ISSUE RATINGS:
This issue is rated as AA+ (Structured Obligation) by CARE and BWR. Such rating indicates that instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Aadhar Housing
FINANCIAL PERFORMANCE:
On performance front, for last four fiscals, AHFL has (on a standalone basis) posted total revenue/net profits of Rs. 178.72 cr. / Rs. 28.37 cr. (FY15), Rs. 192.84 cr. / Rs. 26.72 cr. (FY16), Rs. 212.02 cr./ Rs. 23.21 cr. (FY17) and Rs. 798.20 cr./ Rs. 99.73 cr. (FY18). Thus it has shown pressure on margins for FY16 and 17 despite higher top line. For FY18 it has posted tremendous growth in top as well as bottom lines. (According to management, this result is post merger).As on 31.03.18 its paid up capital of Rs. 25.15 cr. is supported by free reserves of Rs. 674.45 cr. As on the same date its gross and net NPAs stood at 1.17% and 0.78% respectively against 1.55% and 1.11% for the previous fiscal. Post issue its current debt equity ratio of 9.05 will stand enhanced to 13.34. On a reformatted consolidated basis it has shown earnings of Rs.99.62 cr. on revenue of Rs.807.31 Cr. for FY18.  

LEAD MANAGERS/TRUSTEE/REGISTRARS:
It is jointly lead managed by Yes Securities (India) Ltd., Edelweiss Financial Services Ltd., Yes Bank Ltd., Axis Bank Ltd., A K Capital Services Ltd., Green Bridge Capital Advisory Pvt. Ltd. and Trust Investment Advisors Pvt. Ltd. Beacon Trusteeship Ltd. is the debenture trustee while Karvy Computershare Pvt. Ltd. is the registrar to the issue.


Conclusion / Investment Strategy

Considering rating, financial results, investment for medium to long term may be considered by the investors looking for fixed income.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Sep 8, 2018

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

The Aadhar Housing Finance NCD Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Aadhar Housing Finance NCD worth investing. The Aadhar Housing Finance NCD Note sets the NCD expectations in systematic way which tells you if Aadhar Housing Finance NCD good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Aadhar Housing Finance NCD by providing NCD recommendations i.e. subscribe, avoid and neutral.