Aavas Financiers off to a tepid D-Street debut, lists at 7.7% discount to issue price

NEW DELHI: Housing finance company Aavas Financiers made a weak market debut on Monday, as the scrip got listed at Rs 758 on BSE, a 7.7 per cent discount to its issue price of Rs 821.

The Rs 1,734-crore initial public offer, which ran from September 25 to September 27, was subscribed 97 per cent at a price band of Rs 818 to Rs 821 per share.

Many brokerages were of the view that the asking valuations for the IPO would leave little scope for negative surprises going ahead.


Brokerage Prabhudas Lilladher had noted that even as Aavas has strong business momentum with greater thrust on operational efficiency, strong credit quality marked by in-house business sourcing, wider usage of analytics, risk management and collection framework with resultant GNPA at mere 0.5 per cent, the valuations were pricing in all the positives.

“Elevated CAR at 61 per cent, challenging market conditions, coupled with higher valuations entail greater risk to the sustenance of high growth and improved RoEs,” it had said in its IPO review.

Valuations at 4.1 times on post-money book and 43 times on FY19 earnings estimate do not leave much upside in the near term, Antique Stock Broking had said in its IPO review.

Besides, the mood at the secondary market was weak. Poor sentiment also had a rub-off on primary market offerings.

The company intends to utilise Rs 400 crore fresh issue to infuse capital in the lending business. Besides, some of the existing stakeholders will sell shares worth up to Rs 1,334 crore in the primary market.

ICICI Securities Limited, Citigroup Global Markets India Private Limited, Edelweiss Financial Services Limited, Spark Capital Advisors (India) Private Limited and HDFC Bank were the merchant bankers to the issue.