India Shelter Finance Corp. is set to launch its initial public offering, with the aim to raise Rs 1,200 crore.
The IPO will be a combination of a fresh issue and an offer for sale. While the fresh issue will comprise 1.62 crore shares for Rs 800 crore, the OFS will have 0.81 crore shares for Rs 400 crore.
The IPO will open on Dec. 13 and close on Dec. 15.
IPO Details
Offer Opens: Dec. 13.
Offer Closes: Dec. 15.
Fresh Issue Size: Rs 800 crore.
OFS Size: Rs 400 crore.
Price Band: Rs 469-493 per share.
Lot Size: 30 shares.
Face Value: Rs 5 per share.
Total Offer Size: Rs 1,200 crore.
Listing: NSE, BSE.
Financials
The company's AUM at the end of H1 FY24 stood at Rs 5,181crore, as compared with Rs 2,199 crore in FY21, compounding at 41%.
Calculated net interest income rose to Rs 798 crore in H1 FY24 (annualised), as against Rs 323 crore in FY21, reflecting a 35% CAGR over 2.5 years.
Profit after tax has grown at 44% CAGR since FY22.
In terms of valuations, the company is issuing shares at a price-to-book value of 3.2 times. Post infusion, the price-to-book would look more attractive at 2.3 times.
Gross non-performing assets have hovered between 1% and 1.92% in the last three years.
Business
Established in 1998, the company specialises in housing finance, offering loans for house construction, extension, renovation, home or plot purchase, and loan against property. The company has 203 branches across 15 states, as of Sept. 30.
The company's target segment is the self-employed customer and it focusses on first-time home loan takers in the low and middle income group in tier-2 and tier-3 cities in India.
Key Risks
The company requires substantial capital for business and operations. Any disruption in its sources of financing could have an adverse effect on business, results of operations and financial condition.
If the company is not able to comply with the financial and other covenants under its debt financing arrangements, it could adversely affect business.
Three states contributed to 62.7% and 63.4% of the company's assets under management for the six months ended Sept. 30, 2023 and FY23, respectively. Any adverse developments in these states could have an effect on financial conditions.
The risk of non-payment or default by customers.
Inability to recover the full value of collateral or amounts outstanding under defaulted loans in a timely manner.
The business is affected by volatility in interest rates for both lending and treasury operations, which could cause net interest income to vary and consequently affect profitability.
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