Started in 2009, Aptus Value Housing Finance India Limited is an entirely retail focussed housing finance company primarily serving low and middle income self-employed customers in the rural and semi-urban markets of India. According to the CRISIL Report, Company had the highest RoA of 6.3% among the Peer Set during the financial year 2020. It is one of the largest housing finance companies in south India in terms of AUM, as of March 31, 2021. They offer customers home loans for the purchase and self-construction of residential property, home improvement and extension loans; loans against property; and business loans, which accounted for 51.76%, 21.12% and 27.12% of total AUM, as of December 31, 2020, respectively. Company offers loans to retail customers and does not provide any loans to builders or for commercial real estate. They target first time home buyers where the collateral is a self-occupied residential property. Loans to self-employed customers accounted for 72.50% of total AUM, while loans to salaried customer accounted for 27.50%, as of December 31, 2020. The company has implemented a robust risk management architecture which is reflected in its asset quality. They conduct all aspects of the lending operations in-house including sourcing, underwriting, valuation and legal assessment of collateral and collections, which enables them to maintain direct contact with the customers, reduce turn-around-times and the risk of fraud. Over years, they have studied and developed credit assessment models specific to over 60 types of customer profiles. The company has diversified the geographical presence by adopting a strategy of contiguous expansion across regions and are focused on achieving deeper penetration in the existing markets. As of December 31, 2020, the states of Tamil Nadu (including the union territory of Puducherry), Andhra Pradesh, Karnataka and Telangana accounted for 53.48%, 26.51%, 9.99% and 10.02% of total AUM, respectively, and they had a network of 181 branches covering 75 districts in such states and the union territory of Puducherry. Over the years, they have successfully grown its presence outside the home state of Tamil Nadu, which accounted for 64.61% of total AUM, as of March 31, 2018. They have increased the number of the branches from 109 as of March 31, 2018 to 181 as of December 31, 2020. The company categorizes its branches on the basis of the duration since the commencement of their operations and as of December 31, 2020, the company had 97 branches that were operational for over three years with AUM of Rs 29,095.06 million, while 84 branches were operational for less than three years with AUM of Rs 8,814.25 million. As per financial performance, Aptus has posted total income/net profits (loss) of Rs. 202.15 cr. / Rs. 66.53 cr. (FY18), Rs. 337.12 cr. / Rs. 111.52 cr. (FY19), Rs. 523.72 Cr. / Rs. 210.89 Cr. (FY20) and Rs. 655.24 Cr. / Rs. 266.83Cr. (FY21). So company has posted consistent high growth. In FY21, due to pandemic sales should have decreased as there was lock down in most of the Indian cities, but it has posted a healthy growth of 25%. Also it has very low NPAs during this tough time. It has posted an average EPS of Rs. 4.84 and average RoNW of 13.52% for last three fiscals. As per FY21 earnings on equity post issue, IPO is priced at P/E of 65.53 and P/B value is 8.58 as per NAV of Rs 41.12/- on 31.03.21. When we compare with other listed peers, issue looks fully priced and comparison between listed peers are shown in above table. On BRLM's front, two BRLMs are associated with this IPO, and have handled around 56 IPO in last three fiscals. From last 10 IPOs, 2 are opened below issue price and remaining are opened above issue on the day of listing. As of now, one is trading below and other are trading above issue price. (As on 04.08.21) As per financials, company has shown very good growth, RoNW is 13.49%, P/E is 65.53 and P/BV is 8.58, which looks fully priced. In Bharat, housing finance sector has shown good growth in past and expected to do well in next 3-5 years. Also, this company is very small and has huge growth opportunities. Performance of BRLM is good. So, we are giving NEUTRAL rating to this IPO and risk taking investors may apply for long term growth.
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