Aavas Financiers Limited IPO Details, Analysis, Subscription & Discussion

Aavas Financiers IPO Issue Details

IPO date:                  25 Sep – 27 Sep 2018
Issue Size:                1734 Cr
Offer Price:              Rs 818 – Rs 821 Per Equity Share
Market Lot:              18 Shares & multiples
Exchange Listing:   BSE, NSE

IPO Timelines (tentative dates):

Allotment & refund:    04 Oct
Credit to Demat:           05 Oct
Listing on Exchange:   08 Oct

Company Promoters:  Lake District, ESCL

Objective of the Issue:

The offer comprises a Fresh Issue by the company to meet future capital requirement and Offer For Sale (OFS) by the shareholders

IPO Registrar: Link Intime India Private Ltd

Company Overview

Incorporated in 2012, Aavas Financiers Limited is a Rajasthan based retail, affordable housing finance company, primarily serving low and middle-income self-employed customers in semi-urban and rural areas in India. A majority of customers have limited access to formal banking credit. According to ICRA Report, the company had the lowest Gross NPAs (Non-performing Assets) and the 2nd highest growth rate of assets under management for the last 3 financial years, among affordable housing finance companies.

Aavas Financiers offer customers home loans for the purchase or construction of residential properties, and for the extension and repair of existing housing units. In addition to home loans, the company offers other mortgage loans including loans against property.

Business operations:
Operating through 166 branches covering 8 states of which, Aavas Financiers has a significant presence in the four states of Rajasthan, Gujarat, Maharashtra and Madhya Pradesh.

The company website: https://www.aavas.in/

Aavas Financiers IPO Analysis

Financial Performance:


Company category:  Fast grower

Company Strengths:

  • Strong financial track record and rapid expansion across various states.
  • Strong distribution network with deep penetration serving underserved customers in Rural and Semi-Urban markets.
  • Robust and Comprehensive Credit Assessment, Risk Management and Collections Framework with continuous reductions in turn-around time
  • Well established processes and a strong four-tier collections infrastructure. A specialized collections team to manage cases where collections are overdue for a certain period as well as a separate team to focus on the resolution of cases through SARFAESI
  • The company is registered with the NHB as an HFC with adopted a strategy of contiguous on-ground expansion across regions
  • Effective Use of Information Technology and Data Analytics to build a Scalable and Efficient Operating Model resulting in quicker loan turn around time and reducing transaction costs
  • Access to Diversified and Cost-Effective Long-Term Financing with continuous reduction in borrowing cost.
  • The long-term credit ratings have improved from CRISIL BBB+/Stable in 2012 to CRISIL A+/Stable currently
  • The Indian housing finance market has grown at a CAGR of 18% over the last five years and is expected to grow at CAGR of 18 to 20% over the next five years.
  • Needs for Home Extension and Home Improvement due to rising urbanisation and the nuclearization of families and tendency of Indian households to own houses in rural areas is significantly higher at 95%.
  • RBI and SEBI recent norms are expected to positively impact HFCs (Housing Finance Companies). Govt initiatives to boost rural income will result in investments in housing. Pradhan Mantri Awas Yojana – Grameen includes a home loan interest subsidy scheme.

Company Risks:

  • Company’s prime customers i.e. self-employed borrowers are more vulnerable to economic cycle Cash flows of self-employed borrowers, are more vulnerable to income shocks when compared to salaried borrowers
  • The Indian housing finance industry is extensively regulated and any changes in laws and regulations applicable to HFCs could have an adverse effect on business.
  • Changes in interest rates for lending and treasury operations, which could cause net interest income to decline.
  • The Indian housing finance industry is highly competitive. The business requires substantial capital and any disruption in sources of capital could have an adverse effect on the business

Peer Comparison:

Direct peers from Indian stock exchange are HDFC, PNB housing, Gruh finance and the current industry average is P/E 22 against Aavas Financiers asked Price to Earnings (P/E) of 54 which is highly expensive.

Analysis Conclusion

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Strong financial track record, robust business assessment, rapid expansion, lowest NPA, effective use of technology, favourable factors for affordable housing in the rural area will contribute to Aavas Financiers long-term prospect.

At the upper price band, the IPO looks too expensive compared to peers. Also, a sudden crash of NBFC (Non-banking Finance company) shares may impact listing price. My say is AVOID at IPO price. Better wait for listing and buy only if share gets in a reasonable bargain price post listing.

Aavas Financiers IPO subscription status



EPS – Earning per share
P/E – Price to Earning
RoE – Return on Equity
QIB – Qualified Institutional Buyer
NII – Non-Institutional Investors
RII – Retail Individual Investor
HFC – Housing Finance Company
NHB – National Housing Bank
NPA – Non Performing Assets


  1. The Grey Market Premium is downgrading day after day to current 15-20 per share as on 26th Sep which also shows not much chances in listing gain.


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