 "Move to separate HFC regulation and supervision welcome, say experts")
Shares of Aadhar Housing Finance (Aadhar) surged 8 per cent to Rs 356 on the National Stock Exchange (NSE) in Thursday’s intra-day trade after High Net Investor (HNI) Akash Bhanshali bought 2.2 million equity shares of housing finance company on Wednesday through open market.
On May 15, listing day, Akash Bhanshali acquired 2.2 million shares worth of Rs 70.19 crore of Aadhar via bulk deals on the NSE, the exchange data shows. Akash Bhanshali purchased these shares at an average price of Rs 319.06 per share, data shows.
Meanwhile, Blue Daimond Properties Private Limited also bought 2.3 million equity shares of Aadhar at Rs 315.04 per share via bulk deal, data shows. However, the names of the sellers were not ascertained immediately.
With today’s rally, Aadhar now trades 13 per cent higher as against its issue price of Rs 315 per share. On Wednesday, the stock listed at Rs 343.70, a 9 per cent premium to its issue price. It fell below its issue price to Rs 292 in intra-day trade, and eventually settled at Rs 332.20.
At 11:20 am; Aadhar was trading 7 per cent higher at Rs 351.55, as compared to 0.34 per cent decline in Nifty 50. As many as 12.89 million equity shares changed hands on the NSE.
The IPO of Aadhar received an overall subscription of 26.76 times. The public issue was subscribed 76.42 times in the Qualified Institutional Buyer (QIB) category, 17.33 times in the Non-Institutional Investor (NII) category and 2.58 times in the retail category.
Aadhar is the largest HFC in the low income housing segment (ticket size less than Rs 15 lakh). The company has robust and comprehensive systems and processes for underwriting, collections, and monitoring asset quality. It also has an internally developed credit assessment model and has digitized monthly collections from customers to the extent possible to reduce processing and improve collection efficiency. Aadhar benefits from the resources, relationships, and expertise of Blackstone, one of the world's leading investment firms, according to analysts.
Aadhar’s asset under management (AUM) increased from Rs 13,327 crore in FY21 to Rs 19,865 crore as of December 2023, and grew at a CAGR of 17.3 per cent. It is likely that Aadhar sustains this growth in future as the low income housing segment financiers do not face competition from banks and large NBFCs as it involves several complexities like: tricky collateral evaluation, difficulty in assessing customer cash flows especially in case of self-employed borrowers and high cost of operations, said analysts at Nirmal Bang Research.
On most other metrics, Aadhar is in the range with its peers such as spreads, cost/income, return ratios and asset quality. Thus on the back of a comparatively larger base and lower growth profile, the brokerage firm believe Aadhar deserves to trade at some minor discount to peer multiples.
Analyst at Aditya Birla Capital believe that Blackstone’s resources, relationships, and expertise and market leader in the low-income housing segment (ticket size less than Rs 15 lakh) in India can create a huge opportunity going forward.
Affordable Housing Finance Players have managed to maintain/ improve their return profiles through higher yields, lower cost of funds and well managed asset quality. Continued branch expansion in existing and newer geographies coupled with government focus would continue to support their growth.
