Aadhar Housing Finance | Issue to open on May 8, 2024; price band set at Rs 300–315

Blackstone-backed Aadhar Housing Finance Company IPO issue to open on May 8, 2024; price band set at Rs 300–315

Aadhar Housing Finance plans to deploy the net proceeds of the fresh capital issue which is Rs 750 crore for future capital needs, which will be largely for on-lending.

The initial public offer (IPO) of Aadhar Housing Finance, which is backed by the Blackstone Group, will open on May 8, 2024, and close on May 10, 2024, for subscription. The IPO price range is between Rs 300 and Rs 315 per share. The company aims to raise Rs 3,000 crore at the high end of the range. The fresh issue of 3.17 crore equity shares to raise Rs 1,000 crore, while 6.35 crore shares will be sold through an offer for sale (OFS) of Rs 2,000 crore by the promoter, BCP Topco VII Pte- an affiliate of funds managed by Blackstone Group Inc.'s affiliates.

Utilisation of IPO Proceeds

Aadhar Housing Finance plans to deploy the net proceeds of the fresh capital issue which is Rs 750 crore for future capital needs, which will be largely for on-lending, with the balance part for general corporate purposes. The company is a major player in providing housing finance to the lower-income segment in India, with its home loans typically below Rs 15 lakh.

Financial Performance

As of December 2023, the company has a pan-India network of 487 branches spread across 20 states. The Bengaluru-headquartered company has posted strong financial figures where net profit in FY23 grew by 22.5% YoY to Rs 544.8 crore and net interest income for the same fiscal surged 28.6% to touch Rs 1,244.3 crore. This led the company’s net interest margin to also rise from 7% in FY22 to 8% during FY23, representing an increase of 110 bps.

Current Financial Health

For the nine months ending December 2024 (9MFY24), Aadhar Housing Finance reported a 35.6% jump in net profit to Rs 547.9 crore compared to the previous fiscal period. The net interest income also saw a nearly 30% increase during this period to Rs 1,170.4 crore, with the net interest margin expanding by 100 basis points to 9%.

As of December 2023, Aadhar’s capital risk-weighted adjusted ratio (CRWAR) was 39.7%, with Tier–I capital at 38.9%, showcasing a decrease from 44.9% in December 2022. The company continues to focus predominantly on the economically weaker and low-to-middle-income customers, with the borrower mix consisting of 57.2% from the salaried segment and 42.8% from the self-employed as of 9MFY24.

Lending Performance

Disbursements during 9MFY24 stood at Rs 4,904 crore, marking a 24.3% growth over the same period in the previous fiscal year, demonstrating robust lending activity and business growth.

Listing Information

Aadhar Housing Finance IPO, is positioned to strengthen its capital base to support future growth and maintain its lead in serving its target demographic effectively. The company’s shares are expected to be listed on the BSE and NSE on May 15, 2024.

Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.