India Shelter Finance Corporation IPO opens for subscription. Here is what brokerages recommend
The three-day initial public offering (IPO) of India Shelter Finance Corporation opened for subscription on Wednesday. The IPO will be open for subscription till December 15.
The Rs 1,200 crore IPO comprises a new issue of shares, amounting to a maximum of Rs 800 crore, and an offer for sale (OFS) of equity shares with a face value of Rs 5 each. The OFS involves shares from promoters and other stakeholders, with an aggregate value of up to Rs 400 crore.
The company has set a price range of Rs 469-493 per share for its IPO. Retail investors must apply for a minimum lot size of 30 shares, requiring a minimum investment of Rs 14,790.
The IPO has allocated up to 50 per cent of shares for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors (NIIs), and at least 35 per cent for retail investors.
India Shelter Finance specialises in housing finance, offering loans for new home construction, remodeling, additions, land acquisition, and providing loans against property (LAP).
Should you subscribe to the IPO?
The India Shelter Finance IPO has garnered positive reviews from analysts, who have cited the company’s financial performance, technology-driven operations, and a scalable business model offering future growth prospects.
Anand Rathi Securities views India Shelter Finance as one of the fastest-growing housing finance companies, boasting high yields and a granular retail-focused portfolio. Valued at a P/BV of 2.4x at the upper price band, Anand Rathi Securities suggests the issue is fairly priced and recommends a subscribe-long term rating for the IPO.
Meanwhile, SBI Securities noted the company’s analytical-driven and scalable business model, emphasising strong processes in underwriting, collection, credit control, and collateral evaluation.
Recommending it as a medium to long-term play, SBI Securities sees promise in India Shelter Finance’s niche presence in the affordable housing sector.
Swastika Investmart also highlighted the technology-driven company for its stable financial performance, attractive valuation, and long-term growth potential, suggesting a ‘Subscribe’ rating for the IPO.
Meanwhile, Choice Broking gave the IPO a “subscribe with caution” rating, saying that while the valuation is favourable, the company’s financial ratios are “not too impressive”.
“At the higher price band of Rs. 493, ISFCL’s issue is priced at a P/BV of 2.4x based on post-issue Adj. BVPS, representing a discount compared to its peer group’s average P/BV of 4.2x. However, even with this apparent discount, ISFCL’s financial ratios do not appear as impressive as those of its competitors,” Choice Broking said in a note.
“The company’s return ratios do not quite match the steady growth seen in both revenue and profit. Considering this, we suggest a “Subscribe with Caution” rating for the issue,” it added.
It is worth noting that for the financial year ended March 2023, India Shelter Finance reported a 32 per cent YoY growth in total income at Rs 606 crore, with profits rising 21 per cent to Rs 155 crore.
The net proceeds from the fresh equity issue will be utilised for future capital requirements and general corporate purposes. Anchor investors, including Goldman Sachs Funds, ICICI Prudential Mutual Fund, Kotak Mahindra Mutual Fund, and others, have already invested Rs 360 crore in the company.
ICICI Securities, Citigroup Global Markets, Kotak Mahindra Capital Company, and Ambit Pvt Ltd are serving as the book-running lead managers for the IPO.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
