 "Aavas Financiers makes weak debut; lists 9% below its issue price")
Shares of housing finance company Aavas Financiers has made a weak debut, as the scrip got listed at Rs 750, 9% below its issue price of Rs 821 on the National Stock Exchange (NSE) on Monday.
The stock opened 8% lower at Rs 758 on the BSE, It dipped 14% to Rs 710 against its issue price post listing. At the close, the stock price stood at Rs 771 on NSE, down 6 per cent from its issue price.
Aavas Financiers had raised Rs 17.34 billion through initial public offer (IPO). The IPO, which opened from September 25-27, was subscribed 97% at a price band of Rs 818 to Rs 821 per share.
The portion reserved for qualified institutional buyers was subscribed 2.77 times, non-institutional investors 26% and retail investors 25%.
Aavas Financiers is retail, affordable housing finance company, primarily serving low and middle-income self-employed customers in semi-urban and rural areas in India.
“At an upper price band of Rs 821, the stock is available at around 3.5x P/FY18 Book (post money) & around 56x P/FY18 earnings with around 10.2% FY18 ROEs (pre-dilution). As the company accelerates its overall leverage, the likely probability of achieving superior RoEs of around 20% remains fairly high. Also with sufficient capital already in place, a further risk of dilution is also quite limited,” analysts at Emkay Global Financial Services said in an IPO note.
“While the progress in affordable housing in India has been rather slow, with total outstanding loans at mere Rs 270 billion (2% of mainstream housing), Aavas has crafted its own success story through a combination of identifying the right customer profile, the right collateral and heavy usage of analytics, systems and process. However, valuations at 4.1 times on post-money book and 43x on FY19e earnings do not leave much upside in the near term. Investors with long-term outlook can look to subscribe,” analysts at Antique Stock Broking said.
The stock opened 8% lower at Rs 758 on the BSE, It dipped 14% to Rs 710 against its issue price post listing. At the close, the stock price stood at Rs 771 on NSE, down 6 per cent from its issue price.
Aavas Financiers had raised Rs 17.34 billion through initial public offer (IPO). The IPO, which opened from September 25-27, was subscribed 97% at a price band of Rs 818 to Rs 821 per share.
The portion reserved for qualified institutional buyers was subscribed 2.77 times, non-institutional investors 26% and retail investors 25%.
Aavas Financiers is retail, affordable housing finance company, primarily serving low and middle-income self-employed customers in semi-urban and rural areas in India.
“At an upper price band of Rs 821, the stock is available at around 3.5x P/FY18 Book (post money) & around 56x P/FY18 earnings with around 10.2% FY18 ROEs (pre-dilution). As the company accelerates its overall leverage, the likely probability of achieving superior RoEs of around 20% remains fairly high. Also with sufficient capital already in place, a further risk of dilution is also quite limited,” analysts at Emkay Global Financial Services said in an IPO note.
“While the progress in affordable housing in India has been rather slow, with total outstanding loans at mere Rs 270 billion (2% of mainstream housing), Aavas has crafted its own success story through a combination of identifying the right customer profile, the right collateral and heavy usage of analytics, systems and process. However, valuations at 4.1 times on post-money book and 43x on FY19e earnings do not leave much upside in the near term. Investors with long-term outlook can look to subscribe,” analysts at Antique Stock Broking said.
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