Subscribe to Aavas Financiers: Choice Broking

Aavas Financiers Ltd. (Aavas), a Jaipur based home financier is coming with an IPO by offering around 21mn share between the price range Rs. 818 - 821 per share. • The issue is a combination of fresh issue and OFS. Net proceed from the fresh issue would be utilized to increase the capital base and to meet the future capital requirements arising out of growth in the business. However, it will not receive any proceeds from the OFS.

Key competitive strengths: • Strong distribution network with deep penetration serving underserved customers in rural and semi-urban markets • In-house sourcing model leading to superior business outcomes •Robust & comprehensive credit assessment, risk management and collections framework • Access to diversified and cost-effective long-term financing

Valuation and Outlook

At the higher price band of Rs. 821 per share, Aavas’s share is valued at an FY18 adjusted P/BV multiple of 5.9x, which is at a premium to its peer average of 4x