The initial public offering of Aptus Value Housing Finance India Ltd. opens on Tuesday as the South India-focused home financier is looking to raise up to Rs 2,780 crore from the primary market.
Financials
The company reported a net profit of Rs 266.9 crore in FY21. According to ICICI Securities, the company's net profit has grown at a compounded annual rate of 148.7% over the FY18-FY21 period.
Net interest income stood at Rs 448.7 crore in FY21, having seen compounded annual growth of 144.5% over the last four years.
More than half of the housing financier's borrowings come from banks, which accounted for 52% of liabilities. However, the company has been attempting to diversify its borrowings and reduce its cost of funds.
The average cost of borrowing for FY21 was at 10.17%. The average incremental cost of borrowing declined from 10.11% in FY19 to 7.7% in FY21 with a reduction of 241 basis points. The company has a A+ credit rating by CARE Ratings Ltd. and ICRA Ltd.
The company's gross non-performing assets ratio were at 2% and net NPA ratio was at 1.69% as of July 2021.
Return on assets stands at 6.5%. The stock is available at a price-to-book value of about 8.6 times on FY21 post-issue book value.
Peers
Aptus competes with other housing finance companies which operate in the low and mid-income segments. These include Aadhar Housing Finance Ltd., Aavas Financiers Ltd., and Repco Housing Finance Ltd., among others.
Risks
A large part of the lender's loan book is to self-employed borrowers, who have seen higher defaults during the pandemic. Equally, the high share of new-to-credit borrowers could raise the risk in Aptus' portfolio.
The company has also high geographical concentration in Tamil Nadu and Andhra Pradesh. As on March 31, 2021, 55.8% of its assets under management were from Tamil Nadu and 24.5% from Andhra Pradesh.
Watch a conversation with the management of Aptus Housing Finance below:
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