Dates: August 10, 2021 to August 12, 2021
Price Band: Rs. 346 to Rs. 353 per share
Minimum Lot: 42 shares
Minimum Application Amount: Rs. 14,532 to Rs. 14,825
Total Issue Size: Up to Rs. 2,780 crores (Fresh issue Rs. 500 crores and OFS Rs. 2,280 crores)
Objects Of The Offer:
Corporate Profile & Business Overview:
Aptus Value Housing Finance India Limited is a completely retail-focused housing finance firm that primarily caters to low and middle-income self-employed consumers in India's rural and semi-urban areas. As of March 31, 2021, the company had a network of 190 branches covering 75 districts in the states of Tamil Nadu (including the union territory of Puducherry), Andhra Pradesh, Karnataka and Telangana.
Aptus offers customers home loans for the purchase and self-construction of residential property, home improvement and extension loans; loans against property; and business loans, which accounts for 51.70 percent, 21.89 percent and 26.41 percent of their AUM, as of March 31, 2021, respectively. They offer loans only to retail customers and do not provide any loans to builders or for commercial real estate. The company targets first time home buyers where the collateral is a self-occupied residential property.
The company handles all elements of its loan operations in-house, including sourcing, underwriting, collateral valuation and legal assessment, and collections, allowing them to keep direct touch with their clients while also reducing turn-around times and the risk of fraud.
The company’s PAT has witnessed a CAGR of 54.8 percent from FY19-21 and Net interest income has delivered a CAGR of 46.42 percent from FY19-21. Further, its AUM has seen a CAGR of 34.54 percent from FY19-21. GNPA for Aptus stood at 0.68 percent as of 31st March 2021 however they have spiked to 2 percent as of 10th July 2021 and the company’s NNPA stood at 0.49 percent as of 31st March 2021, which has also increased to 1.69 percent as of 10th July 2021. It has also witnessed a decline in collection efficiency from 99.76 percent as on 31st March 2021 to 93.94 percent on 10th July 2021. Furthermore, the average yield on disbursements has been on a decline from 17.23 percent in FY19 to 16.88 percent in FY21.
The company’s incremental borrowings have increased from Rs 781 crore in FY19 to Rs 967 crore in FY21 with a reduced incremental borrowing cost.
Presence in under-penetrated markets with growth potential
In-house operations leading to desired business outcomes
Experienced and stable management team
The Coronavirus pandemic (COVID-19) has had adverse effects on company’s business, operations, cash flows and financial condition. Any further outbreaks may further deteriorate the condition
Company’s operations are primarily focused in the states of Tamil Nadu and Andhra Pradesh and any adverse developments in these regions can significantly impact the business
The company’s cost of borrowing at 9.13 percent is among the highest within its peer group of Aashar Housing Finance(8.27 percent), Aavas Financiers(7.94 percent), Home First Finance(7.94 percent), Repco Home Finance(7.95 percent)
Although Aptus has been able to retain the quality of its assets over time, the company's loan portfolio is not fully seasoned.
Company primarily offers services to self-employed individuals who belong to the lower, middle-income division which is highly fragile to economic activity slowdown
Samco Research’s Stance:
Aptus Value Housing Finance’s asset class is susceptible to various credit risks which may result in increased levels of NPAs in the company and the valuations also don’t justify adherent business risks. Further, with very high competitive intensity within the industry we feel there are better investment opportunities for investors and sticking to the leaders of the space amidst uncertainty would be safer. Therefore, we advise investors to ‘AVOID’ subscribing to this IPO.