India Shelter Finance IPO: Should you subscribe to Rs 1,200 crore issue?

The Rs 1,200 crore IPO consists of a fresh issue of 1.62 crore shares worth Rs 800 crore

WestBridge Capital and Nexus Venture Partners-backed India Shelter Finance Corporation IPO will open for subscription on December 13. The Rs 1,200 crore public 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. Analysts at Choice and GEPL have assigned a subscribe rating to the issue due to the company’s analytical-driven and scalable business model and niche presence in the affordable housing space.

The price band for the issue has been fixed at Rs 469-493 per share. 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, respectively. The offer will close on December 15 and shares are likely to be listed on bourses on December 20.

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

Should you subscribe to Shelter Finance Corporation IPO?

Choice: Subscribe With Caution

“At the upper price band, ISFCL’s issue is priced at a P/BV of 2.4x based on post-issue Adj. BVPS, representing a discount compared to its peer group’s average P/BV of 4.2x. However, even with this apparent discount, ISFCL's financial ratios do not appear as impressive as those of its competitors. The company's return ratios do not quite match the steady growth seen in both revenue and profit. Considering this, we suggest a ‘Subscribe with Caution’ rating for the issue,” said analysts at Choice Equity Broking.

GEPL Capital: Subscribe

“The company maintains a robust capital adequacy ratio of 48.7 percent, with a Tier I ratio of 47.9 percent, 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,” said analysts at GEPL Capital.

Also Read: DOMS Industries IPO: Should you subscribe to Rs 1,200 crore issue?

SBI Securities

“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 them for medium to long-term play,” said analysts at SBI Securities.

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