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Written by - Fisdom Research

May 13, 2024 9 minutes

Company Background 

Aadhar Housing Finance Limited is a housing finance company focusing on the lower-income segment. Their deep impact branches and sales offices are dedicated to serving customers in India’s tier 4 and tier 5 towns. As of September 30, 2023, the company has enrolled 12,221 Aadhar Mitras who receive referral fees for sourcing customers’ loans. They offer a range of mortgage loan products for residential and commercial property purchase, construction, home improvement, and extension. With a vast network of 471 branches, including 91 sales offices, spread across 20 states and union territories, the company operates in approximately 10,926 pin codes throughout India. As of September 30, 2023, the company has 3,695 employees, while its subsidiary, Aadhar Sales and Services Private Limited (ASSPL), employs 1,851 individuals. Having served 246,983 customers nationwide through their extensive branch and office network, Aadhar Housing Finance Limited continues to make strides in providing financial services to underserved communities. 

Company Key Highlights 

Established in 2010, Aadhar Housing Finance Limited is a prominent housing finance company in India, primarily focusing on the lower-income segment. Specializing in mortgage-related loans, it serves the low-income housing segment, with a notable emphasis on economically weaker and low-to-middle-income customers. The company has garnered recognition for having the highest Assets Under Management (AUM) and net worth among its peers. With a presence spanning 20 states and union territories, Aadhar Housing Finance caters to diverse geographic needs, effectively mitigating concentration risk. 

  • Seasoned business model with strong resilience through business cycles: 

 Throughout different business cycles, they’ve upheld their status as India’s premier HFC for low-income housing, utilizing their customer-centric model, expansive network, and proficient management. Despite obstacles like demonetization, GST, and the COVID-19 pandemic, their financial performance has stayed strong, showcasing the robustness of the business and leadership. 

  • Strong Geographical Distribution Network: 

 The bank has strategically positioned its business across 487 branches, which include 109 sales offices, spread across 20 states and union territories within the country. These branches and sales offices are strategically located in Tier II and Tier III cities and regions, allowing the bank to effectively serve customers in these areas while also expanding its reach and market presence. 

  • Social objectives are one of the core components of our business model: 

 They’ve made social goals a big part of their business, which helps them stand out. They focus on lending to people who don’t have much money, and a lot of their money and customers come from this group. They also help with government housing plans like Pradhan Mantri Awas Yojana. Plus, they create jobs through programs like ‘Aadhar Mitra’, especially in cities and towns, which helps improve the economy in those areas. 

  • Strong systems and processes for underwriting, collections, monitoring asset quality. 

They’ve implemented a strong credit assessment, risk management, and collections framework to identify and handle inherent risks. Their primary focus is on financing retail customers, particularly salaried individuals buying residential properties. They follow an internal ‘risk appetite statement’ that outlines the level and types of risk they accept to achieve objectives, effectively balancing risk and return. Regular monitoring against qualitative and quantitative metrics, including capital, profitability, asset quality, and compliance, ensures alignment with this policy. 

Key Business Strengths 

  • Aadhar Housing Finance is India’s leading low-income sector HFC with the highest net worth and AUM among competitors. 
  • The company boasts an expanding gross AUM and a comprehensive branch network tailored to serve its intended customer base effectively. 
  • It has robust systems for risk management, including credit evaluation and collections, which enhance profitability and asset quality. 
  • Technology-driven solutions facilitate efficient loan processing and accurate credit decisions.
  • Operating across 20 states and union territories, Aadhar Housing Finance specializes in extending its reach to semi-urban areas, offering products like Aadhar Gram Unnati to facilitate broad market penetration. 

Key Risks to Business 

  • Regulatory investigations into former promoters could negatively impact Aadhar Housing Finance and its share value. 
  • Strong promoter control may restrict shareholder influence and delay key decisions, affecting business outcomes. 
  • Reliance on external information could lead to inaccuracies in credit evaluations, increasing NPAs and risking financial stability. 
  • It operates in a highly competitive industry. 

Fisdom Research Assessment: 

Aadhar Housing Finance leads the low-income housing sector among HFCs with a nationwide presence and strong financials. With competitive valuations, low NPAs, and high RoE, it’s poised for growth, boasting a comprehensive nationwide presence through its 498 branches, it’s extensive branch network, diversified product offerings, healthy margins and stable asset quality are the key driving factors for the company. Investors can consider investing in this IPO from a long-term perspective. 

Offer Details 

Offer period 
Bid/Offer Opens On: Wednesday, May 08, 2024 
Bid/Offer Closes On: Friday, May 10, 2024 
Issue Size Price Band Bid Lot 
~ Rs.2,857 – Rs.3,000 Cr Rs. 300 – Rs.315 47 
Particulars Lots Shares Amount 
Minimum 47 RS. 14,805 
Maximum 13 611 Rs. 1,92,465 
Minimum 14 658 Rs. 2,07,270 
Maximum 67 3,149 Rs. 9,91,935 
Minimum 68 3,196 Rs. 10,06,740 

Issue Structure 

QIB Shares Offered Not more than 50% of the offer size 
Retails Shares Offered Not less than 35% of the offer size 
NII (HNI) Shares Offered Not less than 15% of the Net Issue 

Indicative IPO Timeline 

Bid/Offer Opening Date Wednesday, May 8, 2024 
Bid/Offer Closing Date Friday, May 10, 2024 
Finalization of the basis of allotment with  The designated stock exchange Monday, May 13, 2024 
Initiation of refunds Tuesday, May 14, 2024 
Credit of equity shares to depository  Accounts Tuesday, May 14, 2024 
Listing Date Wednesday, May 15, 2024 

Other Details 

Book Running Lead Managers ICICI Securities Limited, Citigroup Global Markets India Private Limited, Kotak Mahindra Capital Company Limited, Nomura Financial Advisory and Securities (India) Private Limited, SBI Capital Markets Limited 
Objects of the Issue 
1) To meet future capital requirements towards onward lending  2) General corporate purposes. 
Listing At BSE, NSE 

Financial Elements 

Particulars Dec-23 Mar-23 Mar-22 Mar-21 
Total Asset (Cr.) ₹ 18,036 ₹ 16,618 ₹ 14,376 ₹ 13,630 
Revenue from Operation (Cr.) ₹ 1,895 ₹ 2,043 ₹ 1,729 ₹ 1,575 
PAT (Cr.) ₹ 548 ₹ 545 ₹ 446 ₹ 340 
Basic EPS ₹ 13.9 ₹ 13.8 ₹ 11.3 ₹ 8.6 
Diluted EPS ₹ 13.5 ₹ 13.4 ₹ 10.9 ₹ 8.4 
EPS for Dec-23 is not annualised 

Comparison with Listed Industry Peers (Fiscal 2023) 


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