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Aadhar Housing Finance IPO: What you need to know

Aadhar Housing Finance's IPO is approaching! How will their unique approach to financing underserved communities influence the sector and your portfolio?

aadhar housing finance ipo

A company in India’s financial sector is focused on helping first-time buyers own their homes, primarily targeting low to middle-income groups. This firm integrates social objectives into its business model, emphasising affordable housing finance to enable under-served communities to achieve homeownership. 

This commitment forms a fundamental part of Aadhar Housing Finance operations.

The company is preparing to launch its initial public offering (IPO). Is this an investment opportunity you should consider? This article delves into the details of Aadhar’s operations and financials to help you understand the IPO better.

About Aadhar Housing Finance Ltd.

Aadhar Housing Finance is a prominent housing finance company established in 2010. It is backed by Blackstone Group through BCP Topco VII Pte. Ltd., which holds a majority stake.

The company focuses on providing affordable housing finance and primarily caters to the low-income segment in India, specifically customers seeking housing loans under ₹15 lakhs.

The company offers a range of products, including home loans for house purchases, plot loans, construction loans, and home extension loans. The business model includes sourcing through direct selling teams, direct selling agents, resident executives and Aadhar mitras, which enhances its grassroots connectivity.

Aadhar Housing Finance latest news

As of December 2023, Aadhar Housing Finance manages assets under management (AUM) worth ₹19,865 crore and services over 255,000 live accounts. With 498 branches across 20 states and union territories, the company targets customers in urban and semi-urban areas across geographies.

The company continues to enhance its operational efficiency through advanced digital integration across its loan lifecycle. This includes digitising processes from loan origination to closure, particularly enhancing the application and collection processes. For salaried customers, applications are streamlined through regional processing units, while self-employed applicants receive tailored services that consider their unique cash flows and financial contexts.

According to Aadhar Housing Finance annual report, the company has maintained its financial stability by diversifying its funding sources, which include term loans, cash credits,  Non-convertible debentures (NCD) issuances, and refinancing options from national housing banks and other financial institutions. This strategic approach aims to sustain growth while maintaining robust asset quality and underwriting standards.

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Financial performance

ParticularsFY 2023 (₹ lakhs)FY 2022 (₹ lakhs)FY 2021 (₹ lakhs)
Asset Under Management (AUM)1,722,283.001,477,779.001,332,710.00
Average yield on Loan Book12.80%12.80%13.20%
Revenue from operations204,352.00172,856.00157,555.00
Profit for the year54,476.0044,485.0034,013.00
Diluted earnings per share (₹)13.410.98.4
Return on equity (%)16.50%15.20%13.50%

Aadhar Housing Finance IPO

IPO opening date08 May 2024
IPO closing date10 May 2024
Issue size₹3,000 crore
Fresh issue₹1,000 crore
Offer for sale₹2,000 crore
Price band₹300-₹315
Lot size47
Listing date15 May 2024
Stock exchangeNSE and BSE

Fund utilisation plan

The company intends to allocate ₹750 crore from the net proceeds primarily for future capital requirements. This will mainly support onward lending activities. The remaining funds from the IPO will be directed towards general corporate purposes.

Also read: Here’s everything you should know about RK Swamy’s IPO

Shareholding pattern before IPO

ShareholderShareholding percentage (%)
BCP Topco98.72
ICICI Bank Limited1.18

Why to invest?

  • Aadhar is a major player in the affordable housing finance sector, with a well-established network across 20 states and union territories. This widespread presence helps in capturing a diverse customer base.
  • The company benefits from strong backing from Blackstone Group, enhancing its financial stability and market credibility. This is complemented by a high capital adequacy ratio, which stood at 39.73% at the end of the third quarter of FY24.
  • Aadhar has access to various funding avenues, including loans from over 21 banks, National Housing Bank refinancing, and capital market instruments. This diversification helps in maintaining healthy liquidity levels and financing its growth effectively.

Watch out for

  • Aadhar’s clientele mainly comprises economically weaker and low-to-middle-income segments. These groups are often the first to be impacted during economic slowdowns, posing a risk to maintaining consistent asset quality.
  • The housing finance sector is highly competitive, with significant involvement from banks, which hold a major portion of India’s total home loan portfolio. As urbanisation increases, competition is expected to grow, possibly affecting market share and profitability.

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Aadhar Housing Finance’s IPO presents an opportunity to invest in a company with a strong focus on affordable housing finance in India. With robust backing and a strategic approach to growth and digital integration, it positions itself well in a competitive market. 

However, potential investors should consider the economic sensitivity of its target demographic and the highly competitive nature of the housing finance sector.

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StockGro Team

StockGro is India’s first and largest ‘Social Investment’ platform aimed at helping you master the art of “Trading & Investment”. Trade, Invest and get rewarded to Learn everything about ‘Investments’ the fun-filled way.

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