Aavas Financiers makes a poor debut

Aavas Financiers, as expected made a very poor debut on the BSE today. As against the IPO price of Rs.821, the stock got listed on the BSE at Rs.746.

The weak market conditions plus the fact that it is a housing finance company has truly played on the stocks sentiments.

The IPO was subscribed 97% led by the highest demand from qualified institutional buyers.

Aavas Financiers, established by listed NBFC AU Small Finance Bank (formerly AU Financiers) in March 2012, as AU Housing Finance, is a Jaipur, Rajasthan head-quartered affordable housing finance company, providing home loans of Rs. 8 lakh average ticket size to 60,000 customers.

In our IPO Analysis, we had said, “While company’s growth rates due to small base and high NIMs are attractive, extremely premium valuations, recent corporate governance practice and rising macro concerns make it an avoid. Better to stock up on the larger peers ruling lower, with stronger fundamentals as well as a proven track record.”