Is Subscribing to the Rs 3,000 Crore Issue Worth It?

Aadhar Housing Finance is all set to launch its initial public offering (IPO) on May 8, with brokerages giving it a ‘subscribe’ rating due to expected improvements in operational performance. The company specializes in lending to the low-income housing segment, offering small-ticket mortgage loans with an average ticket size of Rs 10 lakh.

The IPO consists of a fresh issue of shares worth Rs 1,000 crore and an offer-for-sale (OFS) of Rs 2,000 crore by promoter BCP Topco VII Pte, an affiliate of Blackstone Group. The valuation at the upper end of the price band is over Rs 13,000 crore, with the price range set at Rs 300-315 per share. The issue will close on May 10.

Analysts have differing opinions on whether investors should subscribe to the IPO. Anand Rathi recommends a ‘subscribe-long term’ rating, citing the company’s focus on the low-income housing segment and strong financials. Swastika Investmart suggests that only high-risk investors should consider subscribing due to potential creditworthiness risks.

Aditya Birla Money, on the other hand, believes in the potential of Blackstone’s resources and expertise in the affordable housing sector, giving a ‘subscribe’ recommendation. The company has already raised Rs 897.9 crore from anchor investors, including prominent institutional names like Morgan Stanley and CLSA Global.

With a healthy financial track record, including a 22.5 percent growth in net profit for FY23 and a 35.6 percent jump in net profit for 9MFY24, Aadhar Housing Finance presents an attractive investment opportunity. The company’s valuation, with a P/E ratio of 19.45 times, is also relatively cheaper compared to its peers in the housing finance sector. Investors are advised to consult with certified experts before making any investment decisions.