India Shelter Finance Corporation IPO: Review, Valuation & Todays GMP

India Shelter Finance Corporation - Complete Overview

India Shelter Finance Corporation operates as a company specializing in affordable housing finance with a primary focus on retail customers. The company boasts a widespread distribution network and a scalable technology infrastructure.

Their target clientele comprises self-employed individuals, particularly those embarking on their maiden home loan journey at the low and middle-income groups in Tier II and Tier III cities across India.

The company experienced a two-year CAGR growth of 40.8% in terms of assets under management, spanning the period from Financial Year 2021 to Financial Year 2023.

In FY 2023, the company impressively yielded 14.9% on advances, which was the second-highest in India for the corresponding period.

Supported by technology and data analytics in their operational processes, the company's credit and risk management policies have maintained asset quality, leading to a GNPA of 1.13% as of March 31, 2023.

India Shelter has a well-established network of 183 branches across 15 states, with a significant footprint in Rajasthan, Maharashtra, Madhya Pradesh, Karnataka, and Gujarat, where branches with a vintage of five years or more constitute this well-established network.

Remarkably, they hold a presence in states that collectively account for a substantial 94% of the affordable housing finance market in India, as of March 31, 2023.

Their operations are seamlessly woven with technology and analytics throughout the customer journey. This includes a paperless approach facilitated by tailored mobile solutions such as the iSales application, which optimises customer acquisition, the IndiaShelter iCredit application for underwriting, and the IndiaShelter iServe application for prompt query resolution.

The company has maintained the average sanction loan-to-value ("LTV") on its portfolio at 50.7% as of March 31, 2023.

Securing their financial backing, the company secured long-term funding from a diversified base of over 35 counterparts, inclusive of 24 scheduled commercial banks, as of March 31, 2023. India Shelter's credit rating is a healthy ICRA A+ (stable) from ICRA Limited and CARE A+ (stable) from CARE Limited.

Despite the Reserve Bank of India's 250 basis points hikes in the repo rate, the company strategically managed to reduce its average borrowing costs from 8.7% as of March 31, 2021, to a commendable 8.3% by March 31, 2023.

Comparing figures, the average incremental cost of borrowing stood at 7.9% as of March 31, 2023, a drop from 8.0% in the Financial Year 2021.

Additionally, their prudent financial management shines through, evidenced by their positive cumulative ALM gap of Rs.12,051.68 million as of March 31, 2023.

 

 

What does the company do? 

India Shelter Finance Corporation operates as a company specializing in affordable housing finance with a primary focus on retail customers. The company boasts a widespread distribution network and a scalable technology infrastructure.

 

IPO Overview 

The upcoming IPO of India Shelter Finance Corporation IPO date is scheduled from 13 December to 15 December 2023. The company intends to raise up to Rs. 1,200.00 Cr from this issue to fulfill various objectives.

Out of the total issue, the company has reserved 50% for institutional investors, 15% for non-institutional investors, and 35% for retail investors. The IPO share price is set between the range of Rs. 469 to Rs. 493 per share.

 

India Shelter Finance Corporation IPO timetable (Tentative)

EVENTS	DATE
IPO Opening Date	13 December 2023
IPO Closing Date	15 December 2023
IPO Allotment Date	18 December 2023
Refund initiation	19 December 2023
IPO Listing Date	20 December 2023

 

India Shelter Finance Corporation IPO Details

IPO Opening & Closing Date	13 December to 15 December 2023
Face Value	Rs. 5 per share
Issue Price	Rs. 469 to Rs. 493 per Share
Lot Size	30 Shares
Price of 1 Lot	Rs. 14,790
Issue Size	24,340,771 Shares (aggregating up to Rs. 1,200.00 Cr)
Offer for Sale	8,113,590 Shares of Rs. 5 (aggregating up to Rs. 400.00 Cr)
Fresh Issue	16,227,181 Shares (aggregating up to Rs. 800.00 Cr)
Listing at	BSE, NSE
Issue Type	Book Built Issue IPO
Registrar	Kfin Technologies Ltd.

 

 

India Shelter Finance Corporation IPO Lot Details

Minimum Lot Investment (Retail)	1 Lot
Maximum Lot Investment (Retail)	13 Lot
Minimum Lot Investment (HNI)	14 Lot
Maximum Lot Investment (HNI)	67 Lot

 

India Shelter Finance Corporation IPO Reservation

Institution Portion	50%
Non-Institution Portion	15%
Retail Portion	35%

 

Company Financial

Amount in Crores

Period	FY 21	FY 22	FY 23
Total Assets	2462.64	3221.22	4295.59
Total Revenue	322.80	459.81	606.23
Net Profit	87.39	128.45	155.34
Net Worth	937.27	1076.13	1240.53
Reserve & Surplus	894.20	1033.02	1197.98

 

Key Financial and Operational Information of India Shelter Finance Corporation

Metric	FY 23	FY 22	FY 21
AUM (Rs. million)	43,594.31	30,732.93	21,985.27
AUM Growth (%)	41.8	39.8	44.7
Loan - Principal Outstanding (Rs. million)	36,666.95	26,882.01	20,335.84
Disbursements (Rs. million)	19,643.77	12,952.61	8,948.76
Disbursements Growth (%)	51.7	44.7	62.3
Total Income (Rs. million)	6,062.31	4,598.06	3,227.99
Profit after Tax (Rs. million)	1,553.42	1,284.47	873.89
Net Worth (Rs. million)	12,405.28	10,761.27	9,372.69
Capital Adequacy Ratio (%)	52.7	55.9	71.5
Stage 3 Assets (%)	1.13	2.12	1.92
Stage 3 Assets (Net) (%)	0.85	1.60	1.37
Average Yield on Loan–Principal Outstanding (%)	14.6	14.9	14.4
Average Cost of Borrowings (%)	8.3	8.3	8.7
Net Income to Average Total Assets (%)	10.6	11.0	10.2
Profit after Tax to Average Total Assets (ROA) (%)	4.1	4.5	4.1
Profit after Tax to  Average Net Worth  (ROE) (%)	13.4	12.8	9.8
Total Branches	183	130	115

 

AUM by City Tier Classification

Amount in Millions

Particulars	FY 23	FY 22	FY 21
Tier I	4,272.38	2,585.35	1,097.65
Tier II	18,764.01	14,235.80	11,018.17
Tier III	20,557.92	13,911.78	9,869.45
Total	43,594.31	30,732.93	21,985.27

 

AUM from Customers based on their Employment Status

Amount in Millions

Particulars	FY 23	FY 22	FY 21
Salaried	13,231.43	9,949.88	7,872.96
Self-employed	30,362.88	20,783.05	14,112.31
Total	43,594.31	30,732.93	21,985.27

 

AUM based on the Income Groups

Amount in Millions

Income Group	FY 23	FY 22	FY 21
Economically weaker section	9,581.30	7,344.72	6,678.54
Low-income group	21,080.44	13,767.92	9,206.63
Middle-income group	11,894.90	8,532.98	5,192.73
High-income group	1,037.66	1,087.31	907.38
Total	43,594.31	30,732.93	21,985.27

 

 

Objective of the Issue

The Company intends to utilize the Net Proceeds for the following objectives:

• To meet future capital requirements for onward lending.
• For general corporate purposes.

 

Promoters and Management of India Shelter Finance Corporation

Anil  Mehta, WestBridge Crossover Fund, LLC and Aravali Investment Holdings are the key Promoters of the Company.

Pre-issue Promoters Holding	56.75%
Post-issue Promoters Holding	48.17%

 

Peer Comparison

India Shelter has following key competitors:

Company Name	Total revenue from operations (in Rs. million)	EPS (Rs.)	P/E ratio
India Shelter Finance Corporation Limited	5,845.30	17.47	-
Aptus Value Housing Finance India Limited	10,933.57	10.08	26.1x
Aavas Financiers Limited	16,087.64	54.26	28.7x
Home  First  Finance Company India Limited	7,909.85	25.20	33.1x

 

IPO's Valuations

India Shelter Finance Corporation IPO Price falling within the range of Rs. 469 to Rs. 493 per share and an EPS is Rs. 17.47 To evaluate the IPO valuation the P/E ratio, when considering the upper price of the issue, amounts to 28.22.

 

Dividend Policy

The company has neither paid dividends in the past nor provided any declaration or assurance regarding future dividend payments.

 

 

IPO's Strengths

• Among the fastest-growing assets under management among Housing Finance Companies in India, high yields and a granular, retail-focused portfolio.
• Boasts a comprehensive and diversified Phygital Distribution Network, with a strong presence in Tier II and Tier III cities.
• In-house Origination Model ensures efficient and seamless operations across various key functions.
• Technology and analytics-driven company with a scalable operating model.
• Robust underwriting, collection, and risk management systems.
• The company possesses a diversified financing profile with a demonstrated track record of lowering financing costs.
• Experienced management team supported by qualified and experienced personnel.

 

IPO Weaknesses

• Non-compliance with financial and other covenants in debt financing arrangements may harm the business.
• 63.4% of assets under management in FY 2023 are from three specific states; any adverse changes in these states could negatively impact the business.
• Deterioration in loan book credit quality or ineffective monitoring could lead to adverse effects on operations and financial conditions.
• Failing to recover collateral or outstanding amounts from defaulted loans promptly could have negative consequences for the business.
• Non-compliance with the National Housing Bank and Reserve Bank of India's periodic inspections may result in fines and penalties.
• The company has to face volatile interest rates.
• Past instances of regulatory filing delays or non-compliance could lead to regulatory actions and penalties, both retrospectively and in the future.
• Company and Directors are engaged in certain legal proceedings.
• The company operates within a highly competitive segment.

 

 

IPO GMP Today

The Latest GMP of India Shelter Finance IPO GMP is Rs. 155.

 

Conclusion

India Shelter Finance Corporation has submitted the DRHP to SEBI and is now poised to enter the public market to raise funds. The company is generating substantial revenue and demonstrating growth. Nevertheless, drawing any conclusions about the IPO at this stage would be premature. It is advisable to withhold making any investment decisions until all the details of the IPO are known.

 

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP

 

 

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