Unlisted shares of India Shelter Finance are trading Rs 135 higher in the grey market, which is a 27.38 per cent listing gain from the public issue
India Shelter Finance IPO: The initial public offering of affordable housing finance company India Shelter Finance has been opened on Wednesday. The IPO is receiving a decent response. Till 11:11 am on the first day of bidding on Wednesday, nearly half of the Rs 1,200-crore IPO has already been subscribed. With an overall 0.49 times subscription, the offer has received bids for 82,86,084 shares as against 1,70,38,540 shares on offer.
The category meant for non-institutional investors received an overwhelming 0.68 times subscription, while the quota for retail individual investors (RIIs) got subscribed a whopping 0.66 times. The portion for qualified institutional buyers (QIBs) was subscribed 0.01 times.
The India Shelter Finance IPO will remain open for public subscription till December 15. The India Shelter Finance IPO will be listed on both BSE and NSE on December 20, while the share allotment might be finalised on December 18.
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India Shelter Finance IPO GMP Today
According to market observers, unlisted shares of India Shelter Finance are currently trading Rs 135 higher in the grey market as compared with its issue price. The Rs 135 grey market premium or GMP means the grey market is expecting a 27.38 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
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India Shelter Finance IPO: Should I Subscribe?
Giving a ‘Subscribe for Long-Term Horizon’ rating to the IPO, SBI Securities in its note said, “The company is valued at P/BV of 2.4x/2.5x of its 1HFY24 financial data at the lower and upper price band respectively on post-issue capital. It is one of the fastest-growing housing finance companies in India, with an extensive distribution network and a well-established presence in Tier II and III cities.”
It added that the business model is analytical-driven and scalable, with strong underwriting, collection, credit control, and collateral evaluation processes. “We are optimistic about their niche presence in the affordable housing space and would recommend for medium to long term play.”
Brokerage firm GEPL Capital has also given a ‘Subscribe’ rating to the issue. “Based on the valuation, issue appears to be fairly valued, The company exhibits robust AUM growth with high yields, emphasizing a granular, retail-oriented portfolio.”
It said the company benefits from pricing control, healthy margins, reduced turnaround time, and enhanced asset quality. Strong asset quality is evident with GNPA at 1.00 per cent, NNPA at 0.72 per cent, and 68.9 per cent of customers possessing a credit score of 650 or higher. The company maintains a robust capital adequacy ratio of 48.7 per cent, with a Tier-I ratio at 47.9 per cent, ensuring a substantially lower leverage ratio at 2.4 times and providing ample room for future growth. “Hence, we recommend a ‘Subscribe’ rating to the stock issue.”
“At the upper price band of Rs 493, the company is looking for post issue market cap of Rs 5,291.69 crore, which implies an earning multiple (P/B) of 1.92(x),” GEPL said.
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India Shelter Finance IPO Details: Lot Size, Minimum Investment
The price band of the Rs 1,200-crore IPO has been fixed at Rs 469-493 a share. The IPO comprises a fresh issue of equity shares worth Rs 800 crore and an offer-for-sale (OFS) of Rs 400 crore by investor shareholders.
Investors can bid for a minimum of 30 equity shares and in multiples of 30 equity shares thereafter.
Those offering shares in the OFS include Catalyst Trusteeship Ltd, Madison India Opportunities IV, MIO Starrock, Nexus Ventures III Ltd, and Nexus Opportunity Fund II Ltd.
Proceeds of the fresh issue will be used to meet future capital requirements towards onward lending and for general corporate purposes. Half of the issue size has been reserved for qualified institutional buyers (QIBs), 35 per cent for retail investors, and the remaining 15 per cent for non-institutional investors.
India Shelter Finance, which is backed by Westbridge Capital and Nexus Venture Partners, is a retail-focused affordable housing finance company with an extensive distribution network and technology infrastructure. The company’s target segment is self-employed customers with a focus on first-time home loan takers in the low and middle-income groups in Tier II and Tier III cities in India.
ICICI Securities, Citigroup Global Markets India, Kotak Mahindra Capital Company, and Ambit are the book-running lead managers to manage the IPO.
