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Salient features of the IPO:

• India Shelter Finance Corporation Ltd. (ISFCL), a retail focused affordable housing finance company is coming up with an IPO to raise around Rs. 1,200cr. It opens on 13th Dec. and closes on 15th Dec. 2023. The price band is Rs. 469 – 493 per share.

• The IPO is a combination of fresh issue and OFS (offer for sale). ISFCL will not receive any proceeds from the OFS portion. From the fresh issue net proceeds, the company will be utilizing Rs. 640cr to meet future capital requirements towards onward lending. Residual funds will be used for general corporate purposes.

Key competitive strengths:

• One of the fastest growing Assets under Management among housing finance companies in India, high yields, and granular, retail focused portfolio

• Extensive and diversified phygital distribution network with significant presence in Tier II and Tier III cities

• In-house origination model to ensure efficient and seamless operations across various key functions

• Technology and Analytics-Driven company with scalable operating model

• Robust underwriting, collection and risk management systems

• Diversified financing profile with a demonstrated track record of reducing financing costs

• Experienced management team supported by qualified and experienced personnel

Risk and concerns:

• Geographical & concentration risks

• Changing legal and regulatory environment

• Volatility in interest rate

• A disruption in funding sources may negatively impact the business

• Competition

Below are the key highlights of the company:

• The company was incorporated on October 26, 1998, under the name "Satyaprakash Housing Finance India Limited." In 2009, Mr. Anil Mehta, the Individual Promoter, took over control of the company. Following this, the company's name was changed to "India Shelter Finance Corporation Limited" on May 13, 2010, with the approval of shareholders through a special resolution. ISFCL is a retailed focused affordable housing finance company with an extensive distribution network and a scalable technology infrastructure across the business operations and throughout the loan life cycle.

• The primary target audience for ISFCL comprises self-employed individuals, specifically those seeking their first home loan. Their focus is on serving customers in the low and middle-income brackets, residing in Tier II and Tier III cities across India. The company specialize in providing affordable housing loans to meet the unique needs of this demographic. These loans fall within the criteria set by the Refinance Scheme under the Affordable Housing Fund for the Financial Year 2021-22, as outlined by the National Housing Bank. Particularly, the loan ticket size is below Rs. 25 lakh.

• IFSCL has a strong and widely spread network of 203 branches across 15 states. They hold a significant presence, especially in Rajasthan, Maharashtra, Madhya Pradesh, Karnataka, and Gujarat, where their branches have been established for five years or more as of September 30, 2023. According to a CRISIL Report as of March 31, 2023, their footprint extends to states that collectively represent 94% of the affordable housing finance market in India.

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