At the higher end of the price band of Rs 818 to Rs 821 per share, the stock of Aavas Financiers is valued at about 69.5 times its earnings.
Further, the stock is valued at 5.9 times based on its FY18 book value per share, which is quite expensive.
This is not just steep but at a premium to that of its competitors.
Inspite of having a small loan book as compared to its peers, the valuation multiples are way higher that the leader HDFC itself. Even smaller competitors with enough listing history like Repco Home Finance, Can Fin Homes, and PNB Housing Finance are available at better valuations. Given the small size and limited track record, the valuations of Aavas seem to be stretched at this stage.
We would therefore recommend subscribers to consider AVOIDING the IPO of Aavas Financiers.
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