SBFC Finance IPO: SBFC Finance IPO to open for public subscription on Thursday, 3 August, and will close on Monday, 7 August. The bidding for anchor investors concluded on Wednesday, wherein the company collected Rs 304.43 crore. The price band for its public issue at Rs 54-57 per equity share of face value Rs 10 each. At the upper end of the price band, the company’s promoters and shareholders seek to raise Rs 1,025 crore from the IPO. Ahead of the public issue, SBFC Finance shares’ GMP rose to Rs 40 per equity share, 70% over the upper end of the share price on offer.
The IPO consists of a fresh issue of equity shares worth up to Rs 600 crore and an offer-for-sale (OFS) component of up to Rs 425 crore by existing shareholders. The company intends to use the net proceeds from the IPO to bolster its capital base, catering to its future capital requirements resulting from business and asset growth. For potential investors, the bidding starts at a minimum of 260 equity shares, with subsequent bids in multiples of 260 equity shares.
Should you apply for the SBFC Finance IPO?
LKP Securities: Subscribe
“There has been credit growth in non-metro cities, owing to financial literacy, mobile penetration and government schemes aimed at bringing the unbanked within the formal banking system. As a result, the industry has witnessed an increase in access to formal credit to MSMEs, which could be attributed to the increase in the number of MSMEs registered with the Ministry of Micro, Small and Medium Enterprises, to 13.09 million in Fiscal 2023, from 0.50 million in Fiscal 2016. At a higher price band (Rs 57), the stock is valued at 2.4(x) P/BVPS with current book value per share of Rs 23. Factoring the superlative return ratio, FY23 ROA of ~3% and further improvement post fund raise; we believe that SBFC Finance Limited is worth subscribing. Thus we recommend SUBSCRIBE.”
SBICAP: Subscribe for listing gains
“The company focuses on loans with ticket sizes ranging from Rs 5 lakhs to Rs 30 lakhs, benefiting underserved customers. As of March’23, 87.27% of the AUM falls within this range, with a Gross NPA to AUM ratio of 1.97%. The company has a strong pan-India presence, with a network in 120 cities across 16 states and 2 union territories. Their diverse distribution allows them to reach underbanked populations in tier II and tier III cities. While comparing the stock with its close peers on similar valuation parameters, the company is fairly valued. We recommend investors to subscribe to the IPO for listing gains at a CUT-OFF price.”
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