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AU Financiers (India) IPO Review, Analysis, Details,Opening Date, Issue Price, Allotment Status, Listing

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AU Financiers (India) Limited is a retail focused non-banking finance company (“NBFC”) primarily serving low and middle income individuals and businesses that have limited or no access to formal banking and finance channels.

Issue Details of  AU Financiers IPO:   

  • IPO Open:  28th June – 30th June 2017
  • Issue Price band:  Rs 355 – 358
  • Issue Size:  53,422,169 Equity Shares
  • Market lot:  41
  • Minimum Investment:   Rs 14678
  • Max Investment for Retail: 533 shares @ 358 = Rs 190814
  • Book Running Lead Managers:  ICICI Securities Limited, HDFC Bank Limited, Motilal Oswal Investment Advisors Limited and Citigroup Global Markets India Private Limited
  • Registrar: Link Intime
  • Listing: BSE / NSE

 IPO Issue Allocation:

  • Employee Reservation Portion – 2% of the total issue size.
  • Qualified institutional buyers (QIBs) –  49% of the total issue size.
  • Non-institutional investors (NIIs) –  15% of the issue size.
  • The retail quota limit in the issue = 34% of the issue size.

 Background:

AU Financiers (India) Limited is a prominent, retail focused non-banking finance company (“NBFC”) primarily serving low and middle income individuals and businesses that have limited or no access to formal banking and finance channels. The company operates in three business lines: vehicle finance; micro, small and medium enterprises (“MSMEs”) loans; and small and medium enterprises (“SMEs”) loans. It is categorized as a “Systemically Important, Non-Deposit Accepting Asset Finance Company” (NBFC-ND-AFC) by the Reserve Bank of India.

The company received a license from the RBI to set up a ‘small finance bank’ (“SFB”) on December 20, 2016 and it is the only NBFC categorized as an asset finance company to obtain such license.

AU Financiers (India) Limited has adopted a strategy of contiguous expansion across regions and as of December 31, 2016, conducted its operations through 300 branches spread across 10 states and one union territory in India, with significant presence in the states of Rajasthan, Gujarat, Maharashtra and Madhya Pradesh and employed 6,092 personnel serving 270,692 active loan accounts.

It has access to diverse sources of liquidity, such as term loans and working capital facilities; proceeds from loans assigned and securitized; proceeds from the issuance of non-convertible debentures (“NCDs”) and commercial paper; and subordinated debt borrowings from banks, mutual funds, insurance companies and other domestic and foreign financial institutions to meet its funding requirements. 

It was also featured in the September 2013 publication of Forbes India as one of the 14 hidden gems of India and was awarded the ‘Best PE-Backed Financial Services Company 2012’ at the VC Circle Awards.

Its  main business is vehicle finance business (new and pre-owned vehicles and for refinancing of vehicles), MSE & SMSE loans.

 In crores half year      
  Sep-16 Mar-16 Mar-15 Mar-14
Vechile Finance 4767 4174 3146 3115
MSME Loans 2577 2217 1376 910
SME Loans 2023 1829 1045 423
  9368 8221 5568 4449

However, once the company sets up the “Small finance bank”, then it will offer other products like Current Accounts, Savings, Loan (housing, Gold loan etc), investment products, financial advisory etc.

Promoters & Promoter Group holdings / Shareholder:

Shareholder Shares %
Redwood Investment 59,770,794 21.03
Sanjay Agarwal 58,477,128 20.57
IFC 30,288,678 10.66
Labh Investments Limited  22,537,530 7.93
Ourea Holdings Limited 21,149,064 7.44
Ms. Jyoti Agarwal 14,182,272 4.99
Ms. Shankuntala Agarwal 14,094,756 4.96
Mr. Chiranji Lal Agarwal 8,119,770 2.86
MYS Holdings Private Limited  7,460,466 2.62
ICICI Prudential Life Insurance 4,857,144 1.71
SBI Life Insurance 4,857,144 1.71
     
  245,794,746 86

Objective of the issue:  

 The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and for the Offer for Sale of 53,422,169 Equity Shares. The Company expects that listing of the Equity Shares will enhance  visibility and brand and provide liquidity to its existing shareholders. Listing will also provide a public market for the Equity Shares in India. The Company will not receive any proceeds from the Offer. All proceeds from the Offer will go to each of the Selling Shareholders, in proportion to its portion of the Offered Shares.

Anchor Investors:  Will be available one day before the IPO opens.

 Financials:

 

Valuation as compared to its peers:

  EPS (2016) CMP (18/5/17) Current In offer document
AU Financiers 9.34  358  38  –
Bajaj Finance 24.23 1312         54.15 38.93
Sundaram Finance 52.49 1531         29.17 24.01
Cholamandalam 37.91 1029         27.14 26.67
RBL Bank 9.6 552         57.50 41.54
IndusInd Bank 39.68 1398         35.23 31.88
Equitas Holding 6.21 162         26.09 25.84
Ujjivan Financial 20.12 341         16.95 18.26

Brokerage Recommendations:

Should you invest:  

At Rs 358 with FY 2017 EPS of 12, the issue is priced at PE of 30, which seems reasonable, given the growth rate in revenue and profits as well as potential to diversify earning as well. You can consider “Subscribing” to this issue for listing gain and long term as well.

Disclaimer:  The articles or analysis on this website should not be constituted as Investment advice. Please consult your financial advisor before making any investments.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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