India Shelter Finance Corporation Ltd IPO

The Gurgaon-based housing finance company, India Shelter Finance Corporation is preparing to launch its IPO. It filed its DRHP with SEBI on 6th August, 2023. The Westbridge Capital and Nexus Venture-backed company has proposed an offer-for-sale and a fresh issue in the offer document. Altogether, the company expects to raise around Rs. 1,800 crore from investors.

If you are interested in India Shelter Finance Corporation Ltd and its upcoming IPO, we have laid out the essential details.  Read along to know more about the same.

Also Read: How does an IPO work?

About the Company

India Shelter Finance Corporation Ltd is a Gurgaon-based housing finance company with an extensive network across the country. It has a presence in over 15 states with a network of 203 branches. The company’s primary customers are self-employed individuals in tier 2 and tier 3 cities of the country. The lender provides housing finance solutions at affordable rates. 

It has a retail-focused product portfolio which comprises home loans and loans against property enabling people to fulfil their dream of owning a house. As of 31st August, 2023, the HFC has disbursed loans of more than Rs. 5,100 crore for owning, extending or improving homes. Moreover, its AUM grew at an exponential rate of 40.8% CAGR over the last two years.

India Shelter Finance Corporation Ltd has a scalable IT infrastructure to leverage analytics and technology across its operational activities such as underwriting, collections, asset monitoring, customer services, etc.

IPO Details and Objectives

India Shelter Finance Corporation Ltd has filed its Draft Red Herring Prospectus with the market regulator. The IPO is proposed to be an offer-for-sale and a fresh issue. The total offer size can be up to Rs. 1,800 crore where the fresh issue would be Rs. 1,000 crore and the OFS would be Rs. 800 crore. 

The investor shareholders participating in the OFS are Madison India Opportunities IV, MIO Starrock, Nexus Opportunity Fund II, Nexus Ventures III and Catalyst Trusteeship Limited as a trustee of Madison India Opportunities Trust Fund and MICP Trust.

The company will not be receiving any proceeds from its offer-for-sale; the shareholders will be entitled to the entire net proceeds after paying out the offer-related expenses. For the fresh issue, the company has proposed several objectives, which are as follows:

• To meet its massive capital expenditure requirements in future
• To meet any expenses related to general corporate purposes
• Receive common benefits from the listing of shares in a stock exchange

The company has appointed Kotak Mahindra Capital, KFin Technologies Ltd, Citigroup Global Markets India, ICICI Securities Limited and Ambit Private Ltd as its book-running lead managers. KFin Technologies Limited is the registrar of this IPO.

Company Financials 

Here is the financial summary of India Shelter Finance Corporation Ltd over the last three financial years.

Particulars	For the Financial Year Ending (In Rs. Millions Except EPS)
	March 31, 2023	March 31, 2022	March 31, 2021
Total Assets	42,955.91	32,212.21	24,626.40
Total Liabilities	30,550.63	21,450.94	15,253.71
Total Expenses	4,042.79	2,929.05	2,098.42
Total Revenue	6,062.31	4,598.06	3,227.99
Profit/Loss After Tax	1,553.42	1,284.47	873.89
EBITDA	4,188.31	3,208.59	2,226.30
EPS (Basic and Diluted)	17.75 (Basic) 17.47 (Diluted)	14.80 (Basic)14.63 (Diluted)	10.19 (Basic) 9.93 (Diluted)

Also Read: How Can You Analyse An IPO?

Strengths of the Company

Here are some of the notable strengths of this company:

• India Shelter Finance Corporation Ltd is one of the fastest growing companies among housing finance companies (HFCs) in terms of its AUM i.e. amount of loans disbursed.
• It has a significant presence in the less-served regions of the tier 2 and tier 3 cities in the states of Madhya Pradesh, Rajasthan, Gujarat, Maharashtra, etc. It aims to cater especially to the people from low or medium-income groups.
• The HFC has a robust in-house infrastructure to ensure smooth and seamless operations. It also implements strategies like localised hiring for its branches to build and strengthen customer connections and trust.
• The company has a scalable IT infrastructure which enables it to smoothen and expand the operational process and drive growth.
• It also has a highly skilled team for collections, underwriting and risk management; they contribute as the key drivers of this company.

Risks Involved

Almost every investment comes with a certain degree of risk. Here are some of the risk factors associated with the business activities of India Shelter Finance Corporation:

• There is a massive capital requirement for a seamless flow of business and operational activities, any disruption in the lender’s sources of finances can adversely affect its overall business.
• A major portion of its revenues comes from three states, namely Maharashtra, Madhya Pradesh and Rajasthan. Therefore, any adverse effect on these states can significantly impact the lender’s overall profitability.
• Like any other lending institution, there is always a risk of non-payments and loan defaults by its customers. This can have a negative effect on the operations and revenue of India Shelter Finance Corporation.

Summary

To summarise, India Shelter Finance Corporation Ltd is one of the fastest-growing housing finance companies in India. The financial institution is preparing to launch its IPO and has filed its DRHP with SEBI with the objective to fund a massive capital expenditure.

If you are willing to invest in this IPO, you can take a call considering its line of business, risk factors, strengths and financials. Keep an eye on our website for more updates on the same.

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