Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/home-first-finance-company-india" target="_blank" data-smartkarma-citation="entities:28865:1" rel="noopener">Home First Finance (HOMEFIRS IN)</a> is growing fast and has a low operating cost, there is a reason why. </li>
<li>
<a href="https://www.smartkarma.com/entities/aavas-financiers-ltd" target="_blank" data-smartkarma-citation="entities:27422:1" rel="noopener">Aavas Financiers Ltd (AAVAS IN)</a> operates in its own specific domain taking only risks that it is comfortable with.  </li>
<li>Competitive feedback is positive for <a href="https://www.smartkarma.com/entities/iifl-holdings-ltd" target="_blank" data-smartkarma-citation="entities:20197:1" rel="noopener">IIFL Holdings (IIFL IN)</a> 's HF subsidiary. <a href="https://www.smartkarma.com/entities/capri-global-capital-ltd" target="_blank" data-smartkarma-citation="entities:18094:1" rel="noopener">Capri Global Capital (CGCL IN)</a> seems to be following AU Bank's footsteps, but hopefully only in underwriting.</li>
</ul>



Home First Finance (HOMEFIRS IN) is growing fast and has a low operating cost, there is a reason why. 

Aavas Financiers Ltd (AAVAS IN) operates in its own specific domain taking only risks that it is comfortable with.  
Competitive feedback is positive for IIFL Holdings (IIFL IN) 's HF subsidiary. Capri Global Capital (CGCL IN) seems to be following AU Bank's footsteps, but hopefully only in underwriting.


India Channel Insight #44 | Home First, Aavas, IIFL Home Finance, Capri Global

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Tamilnad Mercantile Bank Ltd / Equity Capital Markets

Tamilnad Mercantile Bank is looking to raise about US$137m in its upcoming India IPO. The deal will be run by Axis Capital, Motilal Oswal and SBI Capital.Tamilnad Mercantile Bank is one of the oldest private sector banks in India, offering banking and financial services to micro, small and medium enterprises (MSME), agricultural and retail customers (RAM). As of Jun 21, it had 509 branches, of which 106 were in rural areas, 247 in semi-urban, 80 in urban and 76 in metropolitan centres. Its overall consumer base is approximately 4.93m and 69.96% of its customers have been associated with the bank for a period of more than five years, contributing 67.02% of deposits and 57.56% of advances.

Tamilnad Mercantile Bank is looking to raise about US$137m in its upcoming India IPO. The deal will be run by Axis Capital, Motilal Oswal and SBI Capital.Tamilnad Mercantile Bank is one of the oldest private sector banks in India, offering banking and financial services to micro, small and medium enterprises (MSME), agricultural and retail customers (RAM). As of Jun 21, it had 509 branches, of which 106 were in rural areas, 247 in semi-urban, 80 in urban and 76 in metropolitan centres. Its overall consumer base is approximately 4.93m and 69.96% of its customers have been associated with the bank for a period of more than five years, contributing 67.02% of deposits and 57.56% of advances.

Tamilnad Mercantile Bank Pre-IPO Tearsheet

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Aptus Value Housing Finance India / Equity Capital Markets

Aptus Value Housing Finance India (APTUS IN)

Aptus Value Housing Finance (AVHF) raised around US$375m in its India IPO. The company is backed by a host of investors including WestBridge, Malabar Investments, Sequoia, Madison and Steadview.Aptus Value Housing Finance India Limited (AVHF) is a retail focussed housing finance company (HFC) primarily serving low and middle income self-employed customers in the rural and semi-urban markets in India. AVHF was one of the largest HFC’s in South India in terms of AUM, as of Mar 21. AVHF’s net interest income has grown by 38-55% pa over FY18-FY21, while its Pre-provision operating profit has done even better with 40-63% pa growth. Earnings growth has been driven by its rapid loan growth which has been between 28-58% pa over the past three years. Although loan growth has been slowing down and disbursements growth had already declined from 47% YoY in FY19 to just 2% YoY in FY21.We covered the company background in our earlier note, <a href="https://www.smartkarma.com/insights/aptus-value-housing-finance-ipo-valuation-is-too-rich-especially-with-an-over-capitalised-book" target="_blank" rel="noopener">Aptus Value Housing Finance IPO Trading - Valuation is too rich, especially with an over-capitalised book</a>.In this note, we will talk about the deal dynamics.

Aptus Value Housing Finance (AVHF) raised around US$375m in its India IPO. The company is backed by a host of investors including WestBridge, Malabar Investments, Sequoia, Madison and Steadview.Aptus Value Housing Finance India Limited (AVHF) is a retail focussed housing finance company (HFC) primarily serving low and middle income self-employed customers in the rural and semi-urban markets in India. AVHF was one of the largest HFC’s in South India in terms of AUM, as of Mar 21. AVHF’s net interest income has grown by 38-55% pa over FY18-FY21, while its Pre-provision operating profit has done even better with 40-63% pa growth. Earnings growth has been driven by its rapid loan growth which has been between 28-58% pa over the past three years. Although loan growth has been slowing down and disbursements growth had already declined from 47% YoY in FY19 to just 2% YoY in FY21.We covered the company background in our earlier note, Aptus Value Housing Finance IPO Trading - Valuation is too rich, especially with an over-capitalised book.In this note, we will talk about the deal dynamics.

Aptus Value Housing Finance IPO Trading - Remains One of the Most Expensive HFCs

Aadhar Housing Finance / Equity Capital Markets

Aadhar Housing Finance (AHF) was the largest affordable housing finance company (HFC) in India, in terms of AUM as of Mar 2020. It plans to raise around US$1bn via selling a mix of primary and secondary shares in its India IPO. AHF is 98.72% owned by Blackstone.AHF is entirely retail-focussed, serving economically weaker and low-to-middle income customers. The average ticket size of its loans was INR0.85m, with an average loan-to-value of 56.73%, as of Sep 2020. 64.83% of its gross AUM consisted of loans to salaried customers, with the rest coming from self-employed customers, as of Sep 2020. AHF’s customer base has grown at 22.18% CAGR over FY18-20, while AUM grew at a CAGR of 19.79%. Total income growth outpaced AUM growth with a 30.85% CAGR over FY18-20.However, its disbursements have been falling and its AUM growth has slowed down over the past few years. In addition, its disclosures aren’t exactly the best.

Aadhar Housing Finance (AHF) was the largest affordable housing finance company (HFC) in India, in terms of AUM as of Mar 2020. It plans to raise around US$1bn via selling a mix of primary and secondary shares in its India IPO. AHF is 98.72% owned by Blackstone.AHF is entirely retail-focussed, serving economically weaker and low-to-middle income customers. The average ticket size of its loans was INR0.85m, with an average loan-to-value of 56.73%, as of Sep 2020. 64.83% of its gross AUM consisted of loans to salaried customers, with the rest coming from self-employed customers, as of Sep 2020. AHF’s customer base has grown at 22.18% CAGR over FY18-20, while AUM grew at a CAGR of 19.79%. Total income growth outpaced AUM growth with a 30.85% CAGR over FY18-20.However, its disbursements have been falling and its AUM growth has slowed down over the past few years. In addition, its disclosures aren’t exactly the best.

Aadhar Housing Finance Pre-IPO - Decent past Growth but Comes with Weird Disclosures

HomeFirst Finance / Equity Capital Markets

Home First Finance (HFF) is an affordable housing finance company targeting first time home buyers in low and middle-income groups. The company aims to raise around US$160m in its India IPO. It is backed by True North, GIC and Bessemer and has recently obtained an investment from Warburg Pincus as well.HFF has grown rapidly over the past few years, driven by an expansion in its branch network and large number of new customers. Over FY17-20, HFF’s loan grew at a CAGR of 62%, while its earnings grew even faster with NII growing at 68%, PPoP at 117% and PAT at 128% CAGR.  It still remains largely focussed on housing loans and has pristine asset quality.However, its funding sources lack diversity and its margin is artificially inflated by its high capitalisation. Furthermore, the company talks a lot about tech but a lot of its functions appear to be still very contact heavy and hence, salesforce/customer service dependent.I have covered various aspects of the deal in my earlier notes,  <a href="https://www.smartkarma.com/insights/home-first-finance-pre-ipo-riding-on-affordable-housing" target="_blank" rel="noopener">Home First Finance Pre-IPO - Riding on affordable housing</a> and <a href="https://www.smartkarma.com/insights/home-first-finance-pre-ipo-earnings-not-showing-the-covid-strain-but-other-metrics-are" target="_blank" rel="noopener">Home First Finance Pre-IPO - Earnings not showing the COVID strain but other metrics are</a>.In this note I’ll run the deal through our ECM framework and talk about recent updates.

Home First Finance (HFF) is an affordable housing finance company targeting first time home buyers in low and middle-income groups. The company aims to raise around US$160m in its India IPO. It is backed by True North, GIC and Bessemer and has recently obtained an investment from Warburg Pincus as well.HFF has grown rapidly over the past few years, driven by an expansion in its branch network and large number of new customers. Over FY17-20, HFF’s loan grew at a CAGR of 62%, while its earnings grew even faster with NII growing at 68%, PPoP at 117% and PAT at 128% CAGR.  It still remains largely focussed on housing loans and has pristine asset quality.However, its funding sources lack diversity and its margin is artificially inflated by its high capitalisation. Furthermore, the company talks a lot about tech but a lot of its functions appear to be still very contact heavy and hence, salesforce/customer service dependent.I have covered various aspects of the deal in my earlier notes,  Home First Finance Pre-IPO - Riding on affordable housing and Home First Finance Pre-IPO - Earnings not showing the COVID strain but other metrics are.In this note I’ll run the deal through our ECM framework and talk about recent updates.

Home First Finance IPO - It’s Not Really Cheap, Banking on Momentum

India

Aavas Financiers Ltd. is a retail-focused housing finance company primarily serving the low and middle-income segments, particularly self-employed individuals, in semi-urban and rural areas of India. The company specializes in providing home loans, including for construction, purchase, renovation, and extension, along with MSME loans and loans against property, to customers often excluded from formal credit due to a lack of documented income. Aavas Financiers Ltd. is headquartered in Jaipur, Rajasthan, India, and was founded on February 23, 2011.

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Aavas Financiers (AAVAS IN)

India Channel Insight #44 | Home First, Aavas, IIFL Home Finance, Capri Global

We visit a tier 1 location in western India, to understand affordable housing, credit practices and the organizational culture of the key players...

Pranav Bhavsar

Tamilnad Mercantile Bank Pre-IPO Tearsheet

Tamilnad Mercantile Bank is looking to raise about US$137m in its upcoming India IPO. The deal will be run by Axis Capital, Motilal Oswal and SBI...

Clarence Chu

Aptus Value Housing Finance IPO Trading - Remains One of the Most Expensive HFCs

Aptus Value Housing Finance (AVHF) raised around US$375m in its India IPO. The company is backed by a host of investors including WestBridge,...

Sumeet Singh

Aadhar Housing Finance Pre-IPO - Decent past Growth but Comes with Weird Disclosures

Aadhar Housing Finance, the largest affordable housing finance company, plans to raise around US$1bn via selling a mix of primary and secondary...

Sumeet Singh

Home First Finance IPO - It’s Not Really Cheap, Banking on Momentum

Home First Finance is an affordable housing finance company aiming to raise around US$160m in its India IPO. It is backed by True North, Warburg,...

Sumeet Singh

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