Aavas Financial makes its feeble debut; list 9% below its issue price

The shares of the housing finance company, Aavas Financiers, made their modest debut, with the stock being listed at 750 Rs, 9% less than its issue price of 821 Rs on the National Stock Exchange on Monday.

The stock opened 8% down to Rs 758 on BSE and plunged 14% to Rs 710 from its after market price.

At 10:01, Aavas Financial traded at Rs 728, 11% below its NSE issue price. Up to now, it has reached a maximum of 756 Rs and a minimum of 715 Rs in one day. In total, 623,920 shares in shares changed hands at the NSE and BSE counter.

Aavas Financiers had raised Rs 17.34 billion through an initial public offering (IPO). The IPO, which opened from 25 to 27 September, was subscribed at 97% at a price range of Rs 818 to 821 per share.

The portion reserved for qualified institutional buyers was subscribed 2,77 times, non-institutional investors 26% and retail investors 25%.

Aavas Financiers is a retail financing, affordable housing company serving mainly low and middle income independent clients in semi-urban and rural areas in India.

"With a price range of over 821 Rs, the stock is available at around 3.5x P / FY 18 Book (money position) and about 56x P / FY 18 with about 10.2% of ROE (pre-dilution ) for 18 FY18. As the company accelerates its overall leverage, the likelihood of obtaining ROEs higher by about 20% remains quite high. In addition, with sufficient capital already in place, the risk of further dilution is also very limited, "said analysts at Emkay Global Financial Services in an IPO note.

"While progress on affordable housing in India has been rather slow, with total outstanding loans of no more than 270 billion rupees (2% of traditional housing), Aavas has built its own success story by combining Identification of customer profile collateral and intensive use of analysis, systems and processes. However, valuations at 4.1 times on the post-money portfolio and 43x in the 19th year leave little benefit in the short term. Investors with long-term prospects can subscribe, "said analysts at Antiques Stock Broking.