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India Shelter Finance Corporation IPO

15 Jan 2024

Introduction:

The Indian stock market has been a hotbed of activity in the last few days. With the indices recording their lifetime highs and a slew of Initial Public Offerings (IPOs) hitting the markets, it’s like a carnival for the investors. One such IPO that has captured their attention lately is the India Shelter Finance Corporation IPO.

Belonging to a retail-focused affordable housing loan company, the IPO plans to raise up to Rs. 1,200 crores through a combination of a fresh issue and an offer for sale. It opens for retail subscription on Wednesday, 13 December 2023 and will close on 15 December 2023. Continue reading to learn additional details concerning the India Shelter Finance Corporation IPO so that you can make an informed investment decision.

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About India Shelter Finance Corporation Limited

Incorporated in 1998, India Shelter Finance Corporation Limited is a retail-focused affordable housing loan company. It provides small and mid-ticket home loans for house construction, purchase, extension, and renovation. These loans typically range between Rs. 5 lakhs to Rs. 50 lakhs. The primary target group of the company includes self-employed individuals and first-time homebuyers belonging to the low- and mid-income groups in Tier II and Tier III cities.

The company has an extensive and well-established network across India, comprising 203 branches in 15 states. The top states from where it draws its business include Rajasthan, Madhya Pradesh, Maharashtra, Karnataka, and Gujarat. As of 30 September 2023, 97.9% of customers of India Shelter Finance Corporation are women and 89.8% of them belong to the Tier II and Tier III cities.

Key Strengths of the Company

Analysing the strengths of the issuing company can offer valuable insights into its prospective growth and aid you in making an informed decision when contemplating an investment in its IPO. Below are the key strengths of India Shelter Finance Corporation as delineated in the company’s Red Herring Prospectus (RHP):

  • The company boasts an extensive and well-established network comprising 203 branches across India
  • An internal origination model ensures smooth and efficient business operations
  • A company propelled by technology and analytics, featuring a scalable operating model
  • Less risk of default through robust underwriting, collection, and risk-management structure
  • A well-diversified financing profile with a proven history of decreasing financing costs

Key Risks and Weaknesses

Assessing risks and weaknesses provides insights into potential threats that may hinder a company’s long-term growth. The principal risks and weaknesses associated with India Shelter Finance Corporation include:

  • 63% of the total Assets Under Management (AUM) is concentrated only in three states. Any negative occurrences in these states could harm the business
  • 70% of the customers are self-employed. It means that they do not have a fixed stream of income
  • The risk of non-payment or default is always a threat to a financing company
  • The company has to maintain adherence to the RBI and NHB lending regulations
  • The company and its director are involved in certain outgoing legal proceedings

Core Financials of the Company

India Shelter Finance Corporation has registered a profit of Rs. 155 crores for FY23, a growth of 21% from the last financial year. The gross AUM after 31 March 2023 stood at Rs. 4,359 crores, an increase of 41.8% from the last financial year. For more details on the company’s financials, you can refer to the table below:

Particulars Period Ended September 2023 As of and for FY Ended March 31
2023 2022 2021
Equity Share Capital 45 44 44 43
Net Worth 1,375 1,241 1,076 937
Gross AUM 5,181 4,359 3,073 2,199
Disbursements 1,220 1,964 1,295 895
Net Income 259 398 312 218
Profit After Tax 107 155 128 87
Net Interest Margin 12% 11% 11% 10%
Return on Assets 5% 4% 5% 4%
Earnings Per Share (Diluted) 12 7 15 10
Net NPA 1% 3% 1% 2%

*Amount in Crores

Source – RHP Dated 7 December 2023 on SEBI website

Details of the IPO

India Shelter Finance Corporation plans to raise up to Rs. 1,200 crores through its IPO, opening for public subscription on Wednesday, 13 December 2023 and closing on Friday, 15 December 2023. The table below illustrates additional IPO details:

IPO Date 13 December to 15 December 2023
Basis of Allotment 18-Nov
Listing Date 20-Nov
Face Value Re. 5 per share
Price Band Rs. 469 to Rs. 493
Lot Size 30 shares
Total Issue Size Rs. 1,200 crores
Fresh Issue Rs. 800 crores
Offer for Sale Rs. 400 crores
Issue Type Book Built Issue
Listing At NSE, BSE

To conclude

Considering robust financials and fair valuation, India Shelter Finance Corporation IPO seems attractive for investors. However, you must consider factors such as your risk appetite, investment goals, and the prevailing market conditions before investing. If you need a Demat account to invest, you can turn to Motilal Oswal. 

 

Related Articles:  How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application 

 

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