India Shelter Finance IPO: 10 things to know before subscribing to Rs 1,200 crore issue

2) Price Band

The price band for the issue has been fixed at Rs 469-493 per share.

3) Offer Details

The company plans to raise Rs 1,200 crore via IPO. The offer consists of a fresh issue of 1.62 crore shares worth Rs 800 crore and an offer-for-sale of 81.13 lakh shares worth Rs 400 crore. Catalyst Trusteeship (as trustee of Madison India Opportunities Trust Fund) and Nexus Ventures III are the biggest selling shareholders in the OFS, offloading Rs 171.3 crore and Rs 142.5 crore worth of shares. The company has reserved half of the offer size for qualified institutional buyers, and 15 percent for high-net-worth individuals. The remainder 35 percent of the offer is set aside for retail investors.

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4) Objectives of Issue

The company will use the net fresh issue proceeds to meet its future capital requirements for lending, which amounts to Rs 640 crore, and will keep the rest of the funds for general corporate purposes.

5) Lot Size 

Investors can bid for a minimum of 30 equity shares and multiples of 30 after that. Hence the minimum investment by retail investors would be Rs 14,070 (30 (Lot size) x 469 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,790.

6) Company Profile

India Shelter Finance Corporation is a retail-focused, affordable housing finance company., primarily serving the self-employed in low and middle-income groups, especially first-time home loan takers in Tier II and Tier III cities. The company has a network of 203 branches spread across 15 states with a significant presence in Rajasthan, Maharashtra, Madhya Pradesh, Karnataka and Gujarat.

7) Financials

The housing finance company registered a profit of Rs 155.3 crore for the year ended March FY23, rising 21 percent over the previous year. Revenue from operations during the same period increased by 30.5 percent to Rs 584.5 crore. The company maintains a conservative loan-to-value proportion of 55.1 percent in the home loan category and 45.3 percent in the LAP segment. In FY23, AUM grew by 41.8 percent on-year to Rs 4,359.4 crore.

8) Lead Managers

The book-running lead managers to the issue are ICICI Securities, Citigroup Global Markets India, Kotak Mahindra Capital Company and Ambit while Kfin Technologies is the registrar.

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9) Risks

i) The business requires a substantial amount of capital for operations, and any disruption in sources of financing could harm the business, financial condition, and results of operations.

ii) There is a risk of non-payment or default by customers, which may adversely affect the business, its financial condition, and the results of operations.

iii) Assets under management for the 1HFY23 in the FY23 were contributed mainly by three states, and any adverse developments in these states could hurt the business, its financial condition, and the results of operations.

iv) If the credit quality of the loan book deteriorates and effective monitoring and collection methods are not implemented, it may adversely affect the results of operations.

10) Listing Date

The trading of India Shelter Finance shares on the bourses will commence with effect from December 20, as per the IPO schedule.