India Shelter Finance IPO subscribed over 10x on Day 3; grey market premium corrects

The Rs 1,200 crore-initial public offering (IPO) of India Shelter Finance Corporation continued to see a strong response from the investors during the third and final day of the bidding process.

The Gurugram-based India Shelter Finance Corporation is selling its shares in the price band of Rs 469-473 apiece with a lot size of 30 shares and its multiples thereafter. The three-day issue consists of fresh share sale of Rs 800 crore, and offer-for-sale (OFS) of up to 8,113,590 equity shares.

According to the data, investors made bids for 18,41,81,940 equity shares, or 10.28 times, compared to the 1,79,10,449 equity shares offered for the subscription by 1.15 pm on Friday, December 15. The bidding for the issue will conclude today, that is, Friday, December 15.

The allocation for non-institutional investors was subscribed 17.47 times, while the portion reserved for qualified institutional bidders (QIBs) saw a subscription of 9.57 times. However, the quota set aside for retail investors attracted bids for 7.61 times as of the same time.

Also read: India Shelter Finance Corporation IPO opens today: Should you subscribe to the issue?

India Shelter Finance Corporation is a dedicated expert in the realm of housing finance. It focuses on offering loans for various housing needs, including house construction, extension, renovation, and the acquisition of new homes or plots. It provides Loans Against Property (LAP) within the range of Rs 5 lakh to Rs 50 lakhs, featuring a flexible repayment tenure of up to 20 years.

Last heard, India Shelter Finance Corporation was commanding a grey market premium of Rs 150-155 per shares, signaling an upside of 31 per cent compared to the upper end of the price band. However, the premium in the unofficial market was about Rs 170-175 before bidding for the issue opened.

ISFC is a housing finance company that caters to retail customers, specifically targeting the low and medium-income groups in Tier II and Tier III cities in India. The company has consistently demonstrated growth in both its revenue and profits, said Choice Broking in its IPO note.

"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," it said.

Also read: Stock recommendations by market analyst for December 15, 2023: Adani Ports, Bank of Baroda and Hero MotoCorp

India Shelter Finance Corporation successfully secured Rs 360 crore from anchor investors, distributing 73,02,229 equity shares at a price of Rs 493 per share. The IPO allocation plan designates 50 per cent for qualified institutional bidders (QIBs), 15 per cent for non-institutional investors (NIIs), and the remaining 35 per cent for retail investors.

The company benefits from pricing control, healthy margins, reduced turnaround time, and enhanced asset quality. Strong asset quality is evident with GNPA at 1 per cent, NNPA at 0.72 per cent, and 68.9 per cent of customers possessing a credit score of 650 or higher, said GEPL Capital in its IPO note.

"The company maintains a robust capital adequacy ratio of 48.7 per cent, with a Tier I ratio at 47.9 per cent, ensuring a substantially lower leverage ratio at 2.4 times and providing ample room for future growth," it added with a 'subscribe' rating for the IPO.

The book running lead managers for this IPO include ICICI Securities, Citigroup Global Markets India, Kotak Mahindra Capital Company, and Ambit, while Kfin Technologies Limited is appointed as the registrar for the issue. The company's shares are set to be listed on both the BSE and NSE on Wednesday, December 20.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

Also read: HFCL shares jump 13% as company 'unveils new era in defence tech'; details here

Also read: Top 10 stocks to watch on December 15, 2023: Texmaco Rail, Titagarh, IRCON, Dr Reddy's, Ami Organics and more