Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

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Equity Capital Markets

Aptus Value Housing Finance India / Equity Capital Markets

Complementing <a href="https://www.smartkarma.com/profiles/nitin-mangal" target="_blank" data-smartkarma-citation="accounts:1988" rel="noopener">Nitin Mangal</a>'s <a href="https://www.smartkarma.com/insights/aptus-value-housing-finance-ipo-key-takeaways" target="_blank" data-smartkarma-citation="insights:55779" rel="noopener">Aptus Value Housing Finance IPO - Key Takeaways</a> , in this Insight, we present takeaways derived by speaking to a couple of branch managers based out of Tamil Nadu.
Valuations are on the higher end ( <a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" data-smartkarma-citation="accounts:4" rel="noopener">Sumeet Singh</a> 's <a href="https://www.smartkarma.com/insights/aptus-value-housing-finance-ipo-valuation-is-too-rich-especially-with-an-over-capitalised-book" target="_blank" data-smartkarma-citation="insights:55773" rel="noopener">Aptus Value Housing Finance IPO - Valuation Is Too Rich, Especially with an Over-Capitalised Book</a>), however, the checks suggest an interesting business model that warrants Aptus to be on the watch list.

Complementing Nitin Mangal's Aptus Value Housing Finance IPO - Key Takeaways , in this Insight, we present takeaways derived by speaking to a couple of branch managers based out of Tamil Nadu.
Valuations are on the higher end ( Sumeet Singh 's Aptus Value Housing Finance IPO - Valuation Is Too Rich, Especially with an Over-Capitalised Book), however, the checks suggest an interesting business model that warrants Aptus to be on the watch list. 

Aptus Value Housing Finance IPO | Primary Check Takeaways

Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Indian Accounting Research Analyst

<a href="https://www.smartkarma.com/entities/aptus-value-housing-finance-india" target="_blank" data-smartkarma-citation="entities:33502:1" rel="noopener">Aptus Value Housing Finance India (1188196D IN)</a> , incorporated at Chennai, Tamil Nadu and commenced its operation on June 2010, is launching its IPO which will open on August 10, 2021. The issue comprises of fresh issue up to INR 5 bn and an offer for sale of 64.6 mn shares by the existing shareholders. The company proposes to utilize the net proceeds from the fresh issue towards augmenting the Tier I capital requirements.
The company is an entirely retail focused housing finance company primarily serving low and middle income self-employed customers in the rural and semi-urban markets of India. The company targets first time home buyers where the collateral is a self-occupied residential property. The average ticket size of home loans, loans against property and business loans offered by the company on the basis of disbursement amounts as on F21 was INR 0.72 mn, INR 0.71 mn and INR 0.62 mn, respectively.
The company backed by its founder M. Anandan and some of its marquee shareholders which include WestBridge Crossover Fund LLC, Malabar India Fund Limited (an affiliate of Malabar Investments), SCI Investments VI (an affiliate of Sequoia Capital), Madison India Opportunities IV (Madison India Capital) and Steadview Capital Mauritius Limited (an affiliate of Steadview Capital Management) has been able to record an exponential AUM growth of 34.54% CAGR from INR 22 bn as on F19 to INR 41 bn as on F21.

Aptus Value Housing Finance India (1188196D IN) , incorporated at Chennai, Tamil Nadu and commenced its operation on June 2010, is launching its IPO which will open on August 10, 2021. The issue comprises of fresh issue up to INR 5 bn and an offer for sale of 64.6 mn shares by the existing shareholders. The company proposes to utilize the net proceeds from the fresh issue towards augmenting the Tier I capital requirements.
The company is an entirely retail focused housing finance company primarily serving low and middle income self-employed customers in the rural and semi-urban markets of India. The company targets first time home buyers where the collateral is a self-occupied residential property. The average ticket size of home loans, loans against property and business loans offered by the company on the basis of disbursement amounts as on F21 was INR 0.72 mn, INR 0.71 mn and INR 0.62 mn, respectively.
The company backed by its founder M. Anandan and some of its marquee shareholders which include WestBridge Crossover Fund LLC, Malabar India Fund Limited (an affiliate of Malabar Investments), SCI Investments VI (an affiliate of Sequoia Capital), Madison India Opportunities IV (Madison India Capital) and Steadview Capital Mauritius Limited (an affiliate of Steadview Capital Management) has been able to record an exponential AUM growth of 34.54% CAGR from INR 22 bn as on F19 to INR 41 bn as on F21.

Aptus Value Housing Finance IPO - Key Takeaways

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Aptus Value Housing Finance (AVHF) aims to raise around US$375m in its India IPO. The company is backed by a host of investors including WestBridge, Malabar Investments, Sequoia, Madison and Steadview CapitalAptus Value Housing Finance India Limited (AVHF) is a retail focussed housing finance company (HFC) primarily serving low and middle income self-employed customers in the rural and semi-urban markets in India. AVHF was one of the largest HFC’s in South India in terms of AUM, as of Mar 21. AVHF’s net interest income has grown by 38-55% pa over FY18-FY21, while its Pre-provision operating profit has done even better with 40-63% pa growth. Earnings growth has been driven by its rapid loan growth which has been between 28-58% pa over the past three years.Although loan growth has been slowing down and disbursements growth had already declined from 47% YoY in FY19 to just 2% YoY in FY21.In this note, we will look at the company’s past performance, run the deal through our ECM framework and talk about pricing

Aptus Value Housing Finance (AVHF) aims to raise around US$375m in its India IPO. The company is backed by a host of investors including WestBridge, Malabar Investments, Sequoia, Madison and Steadview CapitalAptus Value Housing Finance India Limited (AVHF) is a retail focussed housing finance company (HFC) primarily serving low and middle income self-employed customers in the rural and semi-urban markets in India. AVHF was one of the largest HFC’s in South India in terms of AUM, as of Mar 21. AVHF’s net interest income has grown by 38-55% pa over FY18-FY21, while its Pre-provision operating profit has done even better with 40-63% pa growth. Earnings growth has been driven by its rapid loan growth which has been between 28-58% pa over the past three years.Although loan growth has been slowing down and disbursements growth had already declined from 47% YoY in FY19 to just 2% YoY in FY21.In this note, we will look at the company’s past performance, run the deal through our ECM framework and talk about pricing

Aptus Value Housing Finance IPO - Valuation Is Too Rich, Especially with an Over-Capitalised Book

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

*Not So Stable: According to the Reserve Bank of India (RBI), gross NPLS are not anticipated to be as bad as originally believed. In addition, the RBI retains its cautious outlook on MSME credit risk; and
* Rose Colored Glasses: As we have highlighted in numerous individual Indian bank notes, credit quality continued to deteriorate at an accelerated pace prior to the second wave of COVID-19. While many financials are already considered technically insolvent, the reality is that there has been absolutely no let up in the breakdown of credit quality.

*Not So Stable: According to the Reserve Bank of India (RBI), gross NPLS are not anticipated to be as bad as originally believed. In addition, the RBI retains its cautious outlook on MSME credit risk; and
* Rose Colored Glasses: As we have highlighted in numerous individual Indian bank notes, credit quality continued to deteriorate at an accelerated pace prior to the second wave of COVID-19. While many financials are already considered technically insolvent, the reality is that there has been absolutely no let up in the breakdown of credit quality.

Reserve Bank Of India – FSR Is Very Unrealistic

*Extending The Emergency Funding Plan: The Emergency Credit Line Guarantee Scheme (ECLGS) for Indian SMEs was launched in May 2020 under the Indian government’s ‘Atmanirbhar’ or self-sufficiency package in order to help offset the weakened economic conditions resultant of COVID-19. ECGLS was subsequently expanded in November 2020 to include 26 additional stressed sectors. In its latest attempt at forbearance, the Indian government just expanded its ECLGS from INR 3 tn to INR 4.5 tn; and *Kick That Can: Banks have already on-lent INR 2.7 tn under the ECLGS, and this recent announcement should further allow India to kick the can of stressed loans down the road. We remind the Indian government that if you’re extending, you are pretending.  That said, net new NPL growth should still accelerate through FYE 2022 given what appears to government crisis mismanagement which should extend the duration of the second COVID-19.

*Extending The Emergency Funding Plan: The Emergency Credit Line Guarantee Scheme (ECLGS) for Indian SMEs was launched in May 2020 under the Indian government’s ‘Atmanirbhar’ or self-sufficiency package in order to help offset the weakened economic conditions resultant of COVID-19. ECGLS was subsequently expanded in November 2020 to include 26 additional stressed sectors. In its latest attempt at forbearance, the Indian government just expanded its ECLGS from INR 3 tn to INR 4.5 tn; and *Kick That Can: Banks have already on-lent INR 2.7 tn under the ECLGS, and this recent announcement should further allow India to kick the can of stressed loans down the road. We remind the Indian government that if you’re extending, you are pretending.  That said, net new NPL growth should still accelerate through FYE 2022 given what appears to government crisis mismanagement which should extend the duration of the second COVID-19.

India

Aptus Value Housing Finance India Limited provides financial services. The Company offers housing and non-housing finance loans, as well as insurance services. Aptus Value Housing Finance India serves customers in India.

Aptus Value Housing Finance India (APTUS IN)

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Aptus Value Housing Finance India (APTUS IN)

Aptus Value Housing Finance IPO | Primary Check Takeaways

In this Insight, we focus on key takeaways derived by speaking to a couple of Aptus branch managers based out of Tamil Nadu.

Pranav Bhavsar

Aptus Value Housing Finance IPO - Key Takeaways

Some of the key takeaways from Aptus Value Housing Finance RHP include better performance vis-a-vis peers such as RoA, asset quality. However we...

Nitin Mangal

Aptus Value Housing Finance IPO - Valuation Is Too Rich, Especially with an Over-Capitalised Book

Aptus Value Housing Finance aims to raise around US$375m in its India IPO. It is backed by a host of investors including WestBridge, Malabar...

Sumeet Singh

Reserve Bank Of India – FSR Is Very Unrealistic

RESERVE BANK OF INDIA: According to the RBI, NPLS are not anticipated to be as bad. This couldn't be further from the truth. NPLs continue to...

Thomas J. Monaco

India Financials – Plop Plop Fizz Fizz

INDIA FINANCIALS: ECLGS was launched in May 2020 to offset poor economic conditions. ECGLS has again been expanded from INR 3 tn to INR 4.5 tn....

Thomas J. Monaco

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