00:00 Hi this is Bhavna and you are watching Good Returns.
00:02 India Shelter Finance's IPO has been opened from today i.e. Wednesday.
00:06 You can place a bidding on this till Friday.
00:09 The price plan of this Rs 1200 crore IPO is between Rs 479 to Rs 493.
00:15 The company has 30 shares in the lot.
00:18 So, if you want to invest in this, you will need at least Rs 14,790.
00:25 India Shelter Finance works in the sector of Corporation Limited Housing Finance.
00:30 It provides loans for building houses, remodelling, addition and buying land.
00:34 And also provides loans against property.
00:38 The company's IPO is getting a good response in the grey market.
00:43 So, it is expected that the company's IPO can give good returns to investors.
00:50 The company's Rs 1200 crore IPO has a fresh issue of Rs 800 crore.
00:54 And the offer for sale will be of Rs 400 crore.
00:58 If we see according to T+3 rules, the allotment of shares will be done on 18 December 2023.
01:05 And those who will not get the subscription will get the refund on 19 December.
01:10 The shares will be transferred to the DMAT account on 19 December.
01:13 NSC and BSC will be listed on both.
01:17 And it is expected to be listed on 20 December.
01:20 ISFC provides home loans and loans against property to self-employed people in small cities and towns.
01:26 But the company's presence is mostly in tier 2 and tier 3.
01:31 So, today to talk in more detail about this IPO,
01:35 the company's CEO and MD Mr. Rupinder Singh and the company's CFO Mr. Ashish Gupta are joining us.
01:42 We will talk about the company's background, where the IPO will be used,
01:46 we will talk about all these things in this conversation.
01:49 So, Mr. Rupinder and Mr. Ashish, welcome.
01:52 First of all, we will try to understand the company's background.
01:56 Thank you for inviting me to your channel.
01:59 I would like to shed some light on my company.
02:03 India Shelter Finance Corporation was formed in 2010.
02:07 And the focus was very clear that we have to cater the affordable housing segment.
02:12 In which the categorization was also done that there are tier 2 and tier 3 markets,
02:17 where the self-employed people who are outside the banking ecosystem,
02:21 who are not generally entertained by the banking,
02:23 sometimes their financial papers are not complete,
02:26 their banking habits are not so strong and there is a requirement for engineering,
02:30 still they have dreams to fulfill them, such a finance company that can support them.
02:35 So, with this theme, this thought, this company was formed and was established.
02:41 And our effort is to take it forward.
02:44 In the last 13 years, we have underrated more than 1.5 lakh customers.
02:49 And today, if we talk about it, we have 65,000 online customers in today's life.
02:55 And the book size is 5100 crores.
02:58 From the very beginning, the focus has been on profitability and has been in the company.
03:04 The asset quality has been maintained very well.
03:06 So, if we talk about the figure, September 30, 2023,
03:11 the company's balance sheet, which we will say is the asset under management,
03:15 is of 5100 crores.
03:17 And if we talk about the profit, it is a profit of 110 crores.
03:20 And if we talk about return on assets, it is more than 4% return on assets
03:24 and more than 16% return on equity.
03:26 If you want to do a quality measure of any company, any book,
03:31 then you should look at the GNP number in it.
03:33 From the beginning, our focus has been very good that there should be good customer systems.
03:37 We should always keep them engaged.
03:39 And where there is a need for collection, there should be a follow-up mechanism.
03:42 So, we are also seeing its results.
03:44 Today, if we look at the results of September,
03:49 the GNP number is about 1.1% which is maintained.
03:54 So, the company is improving its day-by-day strength
03:58 and is trying to make its niche segment in the market.
04:02 So, giving a good turnaround time, giving good customer service
04:05 and opening a branch near the customer is the thought process
04:09 through which we are able to leverage ourselves.
04:11 But sir, I would like to ask you that your main focus is on first-time borrowers.
04:18 So, what is the scope of this?
04:20 Don't you think that because there are first-time borrowers,
04:22 the market of the company becomes a little limited?
04:26 It is like this that we have more than 70% first-time mortgage borrowers.
04:31 Because the market we go to, banks do not entertain them there.
04:36 It is so expected.
04:38 Sometimes they feel that their scope of work is beyond their properties.
04:46 So, due to this, they do not get support outside the banking ecosystem.
04:52 So, even now, you see, the focus of the maximum home loan institution in India
04:59 is after the top 20-25 cities, it is a little conservative outside it,
05:04 there is a lot of control, etc.
05:06 So, we have a very big opportunity of 5K.
05:08 The maximum share of the country is there and it is not that there is no aspiration of home.
05:12 Infrastructure is developing day in day out, new markets are being created.
05:16 So, we are getting a lot of support from there.
05:19 And the customers who are on our book, they also get a lot of new customers.
05:24 This is a very big strength that is being built day in day out.
05:26 And this is not the reason that if you look at the numbers,
05:29 then the number of the last 3-4 years, which is also in front of you,
05:31 that 40% growth has been given in the last year and 10 years and then it is maintaining well.
05:36 Right, right.
05:37 What is the average ticket size of Ashish's loan and what are the interest rates?
05:42 The segment in which we work, the properties that come to us,
05:46 the value of the property is around 25-30 lakhs.
05:50 And the funding that we provide on that property, on an average,
05:53 we provide around 9-10 lakhs of funding.
05:56 And the ticket size of our loan is 9-10 lakhs.
06:00 But overall, if you see, we focus on the segment from 5 lakhs to 30 lakhs.
06:07 And what is the interest rate?
06:10 For interest rates, we basically have 3 products.
06:14 The first product is of affordable housing finance,
06:17 where we get funding at a concessional rate from the HVC.
06:21 We charge around 10-15% rate on the first month.
06:25 And in our other home loans, we charge around 13% rate on that.
06:30 And the third product is loan against property for business purposes,
06:35 we charge around 14% interest on that.
06:38 So, collectively, on an average, our interest comes to around 14.5%.
06:43 14.5%, perfect, perfect.
06:46 Recently, the RBI's decision was made to increase the risk weightage.
06:51 What impact did that have on your customers?
06:55 Did the borrowing cost increase?
06:57 What are the scenarios that you are seeing now?
07:01 The RBI's circular, the two things that RBI focused on,
07:06 were unsecured lending and consumption-based lending.
07:11 Basically, the RBI's segment was to discourage personal loans in the market.
07:16 Which is an emphasis on RBI in that particular segment.
07:19 If you look at the RBI's business, it is altogether different.
07:24 It is in contrast to, for example, we do business in secure lending,
07:27 which has defined end-use.
07:29 In which either the customer has to purchase the property or invest money for the business.
07:33 Right.
07:34 There is no direct impact on us.
07:36 So, the bank that we are lending, there will be no risk-rate change on that.
07:40 But since the bank's risk-rate will not change,
07:43 we don't expect that our cost of loan from the bank will have any impact.
07:47 Or the customer that we are lending, there will be no impact on that.
07:51 Right. That's right.
07:53 Mr. Rupinder, the majority of the company's loan book is from three states.
07:59 Rajasthan, Maharashtra, and Madhya Pradesh.
08:01 Asset under management is also from these three states,
08:05 which is your majority share, so is there anything big or specific
08:09 reason that your presence is in these three states?
08:14 Because your presence is in overall 15 states.
08:17 Yes.
08:18 So, you are focusing more on these three.
08:20 Yes. When we started the business 13 years ago,
08:24 we started the business from Rajasthan.
08:26 And a business like mortgage does not happen overnight.
08:30 You have to show market presence.
08:32 You have to create reach from the customers there.
08:35 You have to open branches.
08:36 So, the states where we have opened the business,
08:39 we have seen good growth there.
08:41 Because Rajasthan was the first state,
08:43 you will see the most concentration in Rajasthan.
08:46 It is a growing stage.
08:47 Yes, obviously.
08:48 It is increasing.
08:49 Apart from this, when we opened Maharashtra and MP,
08:52 there was the same growth there.
08:54 And we went to the south about 6 years ago,
08:57 there also started getting traction.
08:59 So, in the first three states, 100% business was there,
09:01 8 years ago.
09:02 And 12 years ago, only 100% business was there in Rajasthan.
09:06 Now, in these three states, there is only 60% left.
09:08 Although, growth is still going on here.
09:10 In the coming time, you will see,
09:12 their concentration will decrease slowly.
09:14 And the new states,
09:15 because there is also a development there,
09:17 there is also growth there.
09:18 So, this distribution and dilution will happen in a way.
09:22 So, you will find this in the south and in the rest of the northern states.
09:26 There also, day by day, their growth percentage is increasing.
09:30 So, today, 61% in these three states,
09:32 you will see, after a while, after a few quarters,
09:35 61% will be below 60%, then below 50%.
09:38 And eventually, it will be evenly distributed in the rest of the 15 states.
09:42 Yes, this is a long business.
09:43 It takes time to do this.
09:44 This is not an overnight process.
09:46 Right.
09:47 Ashish ji, where is the company going to use the money collected from the IPO?
09:54 What are some plans for that?
09:56 So, the money from the IPO,
09:58 we will use it to strengthen our capital base.
10:01 So, as of now, our company's net worth is around Rs. 1,172 crores.
10:04 So, this is the total size of Rs. 1,200 crores.
10:07 In this, Rs. 800 crores is the primary issuance,
10:09 which will be given to the company.
10:11 And Rs. 400 crores is the offer for sale,
10:13 which will go to the existing shareholders,
10:15 who are selling their shares.
10:17 So, the capital of Rs. 800 crores
10:19 will help the company to improve its leverage.
10:22 So, as of now, the company's leverage,
10:24 if we see, it is around 3.5 times.
10:27 So, if we pressurize,
10:28 our leverage will be around 2.25 times.
10:31 So, we will get a run-day of around 4 years,
10:33 on which we will be able to grow our business.
10:36 So, the rating agencies of the company,
10:38 they expect that the leverage of the company
10:41 should be around 4.5 times.
10:44 So, when this capital comes,
10:45 we will get a little bit of space in the leverage,
10:48 and then we will have a sufficient run-day for the next 4 years.
10:53 Right.
10:54 What are the company's plans ahead?
10:56 What are the growth plans?
10:57 How do you see the company,
10:59 how will the company grow in the next 5 years?
11:02 Are there any new products that you are going to launch?
11:06 We are a housing finance company.
11:09 Our core focus is in this category,
11:11 home loans, loan against property.
11:13 The ratio of home loans will be 60%,
11:16 and the ratio of loan against property will be 40%.
11:18 If you talk about the ratio.
11:20 We have developed an expertise,
11:22 and we have created a niche,
11:23 which is of tier 2-tier 3 market.
11:25 To cater that segment,
11:27 which is just sitting on the words of the financial ecosystem,
11:31 and it will be included in it.
11:33 This thought process will remain.
11:34 So, our thought is that,
11:36 from the way we have developed a branch network,
11:38 we have gained our presence in 15 states.
11:40 How to take it deeper,
11:42 so that the trends we have shown so far,
11:46 we will continue to grow on it.
11:47 So, our focus area will remain the same.
11:49 We don't want to bring any additional product yet.
11:52 We are a housing finance company,
11:53 and our focus will remain on this.
11:55 And we feel that,
11:56 what we have done in this segment,
11:57 a lot of work is going to be done in this too.
11:59 And there are still a lot of opportunities for growth.
12:02 Already in this.
12:03 Ashish, what are your expectations from the IPO?
12:06 Because today is the first day.
12:08 So, what are the expectations?
12:09 What is the response that you are getting so far?
12:12 Overall, if you see,
12:13 like yesterday, our anchor book was opened.
12:15 So, in the anchor book,
12:16 we can see a very good response from the long-term investors.
12:19 So, the larger mutual funds,
12:21 long-term investors, overseas investors,
12:23 they have got a very good subscription.
12:25 So, we expect a similar kind of response in our IPO.
12:29 So, what we are doing here in the market,
12:32 we have completed the retail subscription,
12:34 we have subscribed to the IPO.
12:36 So, as this IPO progresses to the third day,
12:42 we see a very good subscription in the overall IPO.
12:45 Okay, Mr. Rupinder,
12:47 I would like to know three points from you,
12:50 because of which investors should invest,
12:54 investors should apply for the IPO.
12:56 Three points.
12:57 It is a very secure focused product.
13:00 Because housing is such a product.
13:02 It is secure, so there is less risk, comparatively.
13:05 It gives a good return,
13:06 because it is affordable housing, in that sense.
13:09 It is the company's vintage.
13:10 And the market in which it is working,
13:12 there is a lot of scope for growth.
13:14 So, the company has a scope to grow very far, in that sense.
13:18 And risk compared to other unsecured,
13:21 or any other lending business,
13:23 I would not like to talk about any particular function.
13:26 In comparison to that,
13:27 there is a very good risk weightage,
13:31 there is no risk weightage in control,
13:35 and there is a better opportunity.
13:36 So, for the long term,
13:38 business has always been considered sustainable for housing.
13:41 Okay, thank you so much.
13:43 And all the very best.
13:45 Thank you, sir.
13:46 Thank you, thank you so much.
13:48 So, if you want a good return in the long term,
13:52 then you can invest in this IPO.
13:54 But even after that,
13:55 GoodReturns advises you that
13:57 whenever you invest in an IPO,
14:00 or invest in the share market,
14:01 then once you take advice from your financial advisor,
14:04 and only then you invest.
14:06 That's all in this video.
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