Aptus Value Housing IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Aptus Value Housing IPO– Incorporated in 2009, Aptus Value Housing is a retail focused housing finance company primarily serving low and middle income self- employed customers in the rural and semi-urban markets of India.

Business — It offers customers home loans for the purchase and self-construction of residential property, home improvement and extension loans, loans against property and business loans. It only offers loans to retail customers and does not provide any loans to builders or for commercial real estate. Its target customers are first time home buyers where the collateral is a self-occupied residential property. It provides loans with a ticket size only below ₹25 lacs

Region of operation –Company caters to 4 states namely Tamilnadu, Andhra pradesh, Telangana, Karnataka

Offer purpose — The IPO is fresh issue of 500 cr and offer for sale by promoter. The issuance of shares is for branch expansion and general corporate purposes. It proposes to utilize the Net Proceeds from the Fresh Issue towards fully augmenting the tier I capital requirements of the company.

Risks —

Limited region of operation can pose regional risks

Loans to low and middle income groups may lead to spike in NPA with COVID-19 3rd wave risk

Strength

Good Financial ratios despite catering to low and middle income groups
One of the largest housing finance companies in South India
Highest return on assets (RoA) of 5.7% among 25% the Peer Set during FY21 and low Loan to value size helps the company further
Backed by sound promoters

Future

With affordable housing on rise in India and emergence of nuclear families present a long runway for company in short to medium term to grow the business and grab the opportunities. Expansion into new markets is also another opportunity

Valuations

Valuations are bit on higher side considering peers but look reasonable due to better finacial metrics

Should we apply?

People can subscribe for listing gains and hold longer with each quarterly review

Exit on listing if getting more than 30-40% gains

Add more if it dips below issue price keeping long term horizon mindset

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