Aptus Value Housing Finance: All You Need To Know
The initial public offering of Aptus Value Housing Finance India Ltd. opens on Tuesday as the South India-focused home financier is looking to raise up to Rs 2,780 crore from the primary market.
The offering includes a fresh issue of shares worth up to Rs 500 crore and an offer for sale of 6.46 crore shares, according to its IPO prospectus.
Existing shareholders who are selling include:
Westbridge Crossover Fund
Aravali Investment Holdings
JIH II, LLC
Madison India Opportunities
Opens: Aug. 10
Closes: Aug. 12
Price band: Rs 346-353
Post-issue market cap: Rs 17,157-17,494 crore, according to ICICI Securities
The company intends to use the proceeds of the issue to strengthen its capital base.
Aptus Value Housing Finance focuses on low- and middle-income customers in rural and semi-urban areas. It offers loans for purchase and self-construction of residential property and home improvement. It also offers loans against property and business loans.
The company’s assets under management have grown at a compounded annual rate of 34.5% to Rs 4,068 crore. As much as 99.5% of the assets come from customers belonging to low and middle-income groups earning less than Rs 50,000 a month.
The average ticket size of loans disbursed by the company is Rs 5-15 lakh. It currently operates in Tamil Nadu, Andhra Pradesh, Karnataka, Telangana and Puducherry. And intends to expand to Odisha, Maharashtra and Chhattisgarh. As of March 31, 2021, the company had a network of 190 branches covering 75 districts.
It has a large share of self-employed customers in its portfolio. 73% of its borrowers are self-employed, 66% fall in the low-income group category and 41% are new to credit. Over 60% of its portfolio is rural.
The company reported a net profit of Rs 266.9 crore in FY21. According to ICICI Securities, the company's net profit has grown at a compounded annual rate of 148.7% over the FY18-FY21 period.
Net interest income stood at Rs 448.7 crore in FY21, having seen compounded annual growth of 144.5% over the last four years.
More than half of the housing financier's borrowings come from banks, which accounted for 52% of liabilities. However, the company has been attempting to diversify its borrowings and reduce its cost of funds.
The average cost of borrowing for FY21 was at 10.17%. The average incremental cost of borrowing declined from 10.11% in FY19 to 7.7% in FY21 with a reduction of 241 basis points. The company has a A+ credit rating by CARE Ratings Ltd. and ICRA Ltd.
The company's gross non-performing assets ratio were at 2% and net NPA ratio was at 1.69% as of July 2021.
Return on assets stands at 6.5%. The stock is available at a price-to-book value of about 8.6 times on FY21 post-issue book value.
Aptus competes with other housing finance companies which operate in the low and mid-income segments. These include Aadhar Housing Finance Ltd., Aavas Financiers Ltd., and Repco Housing Finance Ltd., among others.
A large part of the lender's loan book is to self-employed borrowers, who have seen higher defaults during the pandemic. Equally, the high share of new-to-credit borrowers could raise the risk in Aptus' portfolio.
The company has also high geographical concentration in Tamil Nadu and Andhra Pradesh. As on March 31, 2021, 55.8% of its assets under management were from Tamil Nadu and 24.5% from Andhra Pradesh.
Watch a conversation with the management of Aptus Housing Finance below: