India Shelter Finance IPO – Dates, Positives, Risks and Review

India Shelter Finance IPO Introduction

India Shelter Finance Corporation Ltd is planning an IPO scheduled for December 13, 2023. India Shelter Finance Corporation Ltd is engaged in the housing finance business. Should you invest in India Shelter Finance Corporation IPO? This article provides insights such as: India Shelter Finance IPOWe provide a complete review and analysis, including date, details, price range, GMP, positive aspects, and risk factors.

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about India Shelter Finance Corporation Limited

The Company is a retail-focused affordable housing finance company with an extensive distribution network of 203 branches as of September 30, 2023. We have a scalable technology infrastructure across business operations and throughout the loan lifecycle.

From FY2021 to FY2023, assets under management (AUM) registered a two-year CAGR growth of 40.8%.

Its target segments are first-time home loan customers from low- and middle-income groups in India’s tier 2 and 3 cities and a focus on affordable home loans, i.e. loans with ticket size below ₹. I am a self-employed customer. 250,000 as per the norms laid down in the refinancing scheme under the Affordable Housing Fund for the financial year 2021-22 issued by the National Housing Bank.

India Shelter Finance IPO date, price range, size

Target of IPO

India Shelter Finance’s IPO size is Rs 1,200 crore, including both fresh issue and OFS.

#1 – Offering price (OFS) 40 billion rupees – This becomes the property of the selling shareholder and the company does not receive any profit from it.

#2 – New issue of Rs 80 billion – These funds will be used to:

• to meet future capital requirements for future financing; and
• General corporate purposes.

About company finances

India Shelter Finance IPO Price Evaluation

• IPO price range is Rs 469 to Rs 493 per share
• PER analysis
  • Considering last year’s FY23 EPS of Rs 17.47, the P/E ratio is 28x.
  • Considering the weighted EPS of Rs 15.27 over the last three years, the P/E ratio is 32x.
• Comparison with listed peers
  • HomeFirst Finance’s PER is 37.7 times (highest value)
  • Aavas Financiers has a P/E ratio of 27.4x (lowest).
  • Industry average PER is 31.7x
  • Therefore, the IPO price range of 28x to 32x P/E is fully priced.

Positive factors for investing in India’s Shelter Finance IPO

Positive factors for investing in this company include:

• Remarkable growth: The company showed a CAGR growth of 40.8% in terms of assets under management (AUM) over the two-year period from FY2021 to FY2023. This indicates a strong and growing financial position.
• Focus on affordable housing: India Shelter Finance targets low- and middle-income self-employed customers in Tier II and Tier III cities, with a focus on affordable home loans with ticket sizes below ₱2.5 million. Focusing on a specific market niche can increase demand and provide relatively high yields upfront.
• High yield with upfront payment: The company achieved an unearned yield of 14.9% for FY23, which was the third highest in India during the same period. This suggests a profitable loan portfolio and better utilization of resources.
• Effective credit and risk management: GNPA as of September 30, 2023 is 1.00%, and as of September 30, 2022 it is 2.79%, and the company’s non-performing assets remain at a low level. This demonstrates effective credit and risk management policies supported by technology and data analytics.
• Extensive sales network: The company has a well-established network of 203 branches across 15 states and has a significant presence in key states such as Rajasthan, Maharashtra, Madhya Pradesh, Karnataka and Gujarat. This extensive distribution network strengthens the company’s reach and market penetration.
• Diverse funding profile: India Shelter Finance has previously met its debt financing requirements from diverse and long-term sources including public and private sector banks, refinances from National Housing Bank (NHB), external commercial borrowings and non-convertible debentures. Ta. A diverse funding profile contributes to financial stability.
• High credit rating: The company has a healthy credit rating of ICRA A+ (Stable) and CARE A+ (Positive) as of September 30, 2023. High credit ratings from reputable institutions give investors confidence in the company’s creditworthiness.
• Strategic focus: The strategy outlined provides a clear roadmap for sustainable growth, including further growth and diversification of the distribution network, leveraging technology for scalability, optimizing borrowing costs and strengthening brand equity. I am.

Negative or risk factors for investing in this IPO

• IPO objects include both OFS and new issues. The OFS portion is paid to the selling shareholder and the company receives no profit.
• Our business relies heavily on large amounts of capital, and any disruption to our funding sources could have a negative impact on our operations, results of operations, and financial condition.
• If we are unable to comply with the financial and other covenants of our debt financing arrangements, our business, results of operations and financial condition could be adversely affected.
• Customer nonpayment or default poses significant risks and may affect the Company’s business, results of operations, and financial condition.
• More than 60% of assets under management are concentrated in three states. Adverse developments in these states could adversely affect our business, results of operations and financial condition.
• The presence of stage 3 assets amounting to Rs 439.27 crore and Rs 880.96 crore as on September 30, 2023 indicates potential credit deterioration. Ineffective monitoring and collection methods can negatively impact operations.
• If we are not able to collect in full on collateral or amounts from default on a timely basis, our business, results of operations and financial condition could be adversely affected.
• If we have difficulty identifying, monitoring or managing risks or implementing effective risk management policies, our business operations may be adversely affected.
• Regular inspections by the National Housing Bank and the Reserve Bank of India involve regulatory compliance risks. Violations could result in penalties, fines and reputational damage, which could affect our business, financial condition, results of operations and cash flows.
• Our business is susceptible to changes in interest rates, which affect both our lending and finance operations. These fluctuations can cause fluctuations in net interest income and impact profitability.
• Past negative cash flows and the possibility of continued negative cash flows in the future pose financial risks to the company.
• Investors should consider all risk factors set out below. India Shelter Finance IPO RHP.

India Shelter Finance IPO GMP

India Shelter Finance IPO GMP is not available for offline trading as it is not traded.

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India Shelter Finance IPO – To buy or not to buy?

Investors should consider all the pros and cons before evaluating whether this IPO is good or bad for their investment.

• India Shelter Finance Corporation’s IPO offers an attractive investment opportunity with significant CAGR growth of 40.8% in assets under management (AUM) over two years from FY2021 to FY2023. The company’s strategic focus is on the low, medium and small self-employed segment. Income groups, especially in tier 2 and tier 3 cities, may be able to get higher yields on upfront payments.
• However, investing in such IPOs comes with risks. 62.7% of his assets are concentrated in his three states, creating vulnerability to adverse developments in these regions. With the presence of Stage 3 assets, credit quality concerns are evident and the inability to effectively monitor and collect loans could have an adverse impact on operations. Additionally, exposure to interest rate fluctuations, historically negative cash flows, and continued large capital requirements are financial risks that potential investors should carefully consider before making investment decisions. highlights the challenges.
• IPOs are also fully priced.

Investors can invest in this IPO after considering all the positive and risk factors.

Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.

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