Aavas Financiers (Aavas) started operations in March 2012 as a retail affordable housing finance company. The company lends to the low-ticket, high yield segment and targets low-income rural and semi urban self-employed customers. Aavas operates from a network of 165 branches spread across eight states (Rajasthan, Gujarat, Maharashtra, MP, Haryana, Delhi, UP and Chhattisgarh) of which 46% loan book is from the state of Rajasthan. Aavas has a loan book (AUM) of `4,359cr as on June 2018 with average ticket size of ~`8.8 lakh.
On the valuation front, at the upper end of the IPO price band, Aavas demands price-book (PB) multiple of 4.3x on FY18 book value (considering Fresh Issue) and 69x FY18 EPS. Established listed peers are trading in the range of 2.5- 3.5x of FY18 PB and in terms of PE these players are trading at valuation of 14-35x of FY18 EPS. Thus, considering the higher valuation, intense competition, and regional concentration of its loan portfolio we recommend NEUTRAL rating to Aavas Financiers.Download Full Report View Full Report in Browser