ICRA

Renuka Ramnath-led homegrown private equity firm Multiples PE has emerged as the lead contender in the ongoing process to induct a new investor by offloading a minority stake in mortgage lender Shubham Housing Development Finance, four persons in the know told Moneycontrol on the condition of anonymity. "Multiples PE has entered into exclusive negotiations as part of this deal. The plan is to pick up between 20 per cent to 24 per cent via a combination of primary and secondary issue of shares," said one of the persons above, adding that the discussions may or may not necessarily fructify into a transaction. A second person also confirmed the above and said that existing shareholders of Shubham Housing Finance, including PremjiInvest, Motilal Oswal PE and others were likely to sell part stake. A third person familiar with ongoing discussions said that Shubham Housing Finance was an IPO candidate in the next few years and that investors, especially key ones like PremjiInvest, would want to hold on and unlock value later.

Multiples PE front-runner to pick up minority stake in Premji Invest-backed Shubham Housing Finance

The company’s operations are concentrated geographically with a high share of AUM in Maharashtra (34% as of March 2024). The top-3 states comprised ~64% of the AUM as on March 31, 2024; albeit declining from ~66% in March 2023. Given the limited portfolio seasoning and target borrower segment, this geographical concentration makes the company vulnerable to geography-specific issues.


Shubham Housing mainly lends to borrowers in the low-income segment, which is more vulnerable to income shocks, as observed during the Covid-19 pandemic. ICRA notes that ultimate losses are expected to be low given the secured nature of the portfolio and moderate loan-to-value ratios. However, given the pace of growth and the relatively riskier borrower profile of the low-and-assessed-income segments, the company remains exposed to volatility in the asset quality.

The issuer has made timely interest payments.

SANJAY CHATURVEDI, Promoter and CEO

The company earnings profile also remains comfortable, characterised by healthy net interest margins and controlled credit costs. It reported PAT of Rs. 136 crore in FY2024, translating to a return of 3.2% on AMA and 10.4% on average net worth, compared to Rs. 92 crore, 3.0% and 10.3%, respectively in FY2023. The company reported a moderation in profitability in Q1 FY2025 largely owing to nil DA transactions. However, the overall profitability for FY2025 is expected to remain comfortable.

Shubham Housing’s borrowing profile is well-diversified, comprising funding relationships with more than 30 lenders. Its funding profile comprised loans from banks (61%), non-banking finance companies/financial institutions (14%), National Housing Bank (NHB; 19%) and DA (6%) as on June 30, 2024. Funds from NHB are typically priced lower and have a longer tenor as well, which is a positive from an asset-liability management (ALM) perspective.

Security Name: 9.50% Shubham Housing Development Finance Company Limited 24 Sep 2027

ISIN:

INE967Q07049

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*All Interest Payments will be subject to TDS (Not Applicable on Government Securities and Tax Free Bonds)

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ICRA

Senior

Secured

ISSUER

Shubham Housing Development Finance Company Limited

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Multiples PE front-runner to pick up minority stake in Premji Invest-backed Shubham Housing Finance

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