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Aptus Value Housing Finance Limited IPO

ICICI Securities 10 Aug 2021

Aptus Value Housing Finance Limited's IPO issue will open on Tuesday i.e., August 10th, 2021 and close on August 12th, 2021. The price band for the offering has been fixed at Rs. 346-353 a share. The company aims to raise Rs. 2780 crore from the IPO which comprises a fresh issue of Rs. 500 crore and an offer for sale (OFS) of Rs. 2280 crores at the upper end of the price band.

Aptus Value Housing Finance is a retail focused housing finance company that targets low & middle self-employed customers in rural and semi-urban areas. The company targets first time home buyers where collateral is self-occupied residential property. Aptus offers home loans for purchase and self-construction of residential property, home improvement & extension loans; loans against property; and business loans. The company’s AUM has grown at 34.5% CAGR in FY19-21 to | 4,068 crore. Of total AUM, 99.46% belonged to low and middle-income groups earning less than Rs. 50,000 per month. Loans to self-employed were at 72% of AUM. As of March 31, 2021, the company had a network of 190 branches covering 75 districts in southern India. Among the peer group, Aptus had the largest branch network in south India with 52% of AUM in Tamil Nadu.

Aptus has focused on disbursing loans with average ticket size of Rs. 5-15 lakh. It intends to continue to tap the huge opportunity and increase market share. By 2022, housing shortage in India is estimated to increase to 10 crore units, 95% of which will be from the weaker section and lower income group, thereby creating significant growth opportunity. The company is currently operating in Tamil Nadu, Andhra Pradesh, Karnataka, Telangana and union territory of Puducherry. Going ahead, Aptus is focused on expanding its presence and deepening penetration in existing regions and further intends to expand its branch network in large housing markets - Odisha, Maharashtra and Chhattisgarh. Aptus has maintained asset quality across economic cycles and events like demonetisation, Covid-19, etc. As of March 31, 2021, GNPA was at 0.68%, while for FY20 and FY19 it was at 0.70% and 0.40%, respectively. The company has not restructured or written off any loans receivable as on March 31, 2021.

Aptus is a fast growing home financier. The company focuses on enhancing operational efficiency, return ratios (14%) and asset quality (0.68%). At the higher end of the price band of Rs. 353/share, the stock is available at a P/BV of ~7x on FY21 BV (post issue).