Expect Muthoot Microfin to launch on December 26 with moderate listing gains

 Expect Muthoot Microfin to launch on December 26 with moderate listing gains

Expect Muthoot Microfin to launch on December 26 with moderate listing gains

Investor interest in Muthoot Microfin's IPO was strong, as seen by the issue's 11.52 subscriptions. Leading the pack, QIBs bid 17.47 times more than their allotment.

With an emphasis on rural India, Muthoot Microfin offers microloans to female clients.

According to gray market patterns, Muthoot Microfin, which is backed by Muthoot Pappachan Group, is probably going to have a sluggish stock market debut on December 26. In the gray market, the stock is trading at a premium of Rs 25, meaning that at the time of listing, there was an approximate 9% upside.

The reaction to the company's first public offering is consistent with expectations of a little improvement in the listing. Qualified institutional buyers (QIBs) led the way and placed 17.47 times higher bids than their quota, contributing to the company's 11.52 times subscription for its first public offering (IPO). High net worth individuals (HNIs) bid 13.2 times for the reserved part, while retail investors purchased 7.61 times.

"We anticipate the IPO to be listed at a premium of approximately 10% over the issue price of Rs 291 per share, given that Muthoot Microfin received a robust subscription of approximately 12 times." Its organization, which serves clients from less prosperous areas, Company History According to Shreyansh Shah, Research Analyst at Stockbox, "Muthoot Microfin better understands the basic requirements of women in rural households as well as designs loan products to meet their needs."

Shah said, "The lender's brand equity, credit rating, and liquidity management system are all supported by a well-diversified funding profile." Because the stock's fair value would be equal to 2.3 times its annualized book value for the first half of FY24 at the present P/BV ratio.

With a focus on rural regions in India, the non-banking financial institution funded by the Muthoot group offers microloans to female clients. Based on total loan portfolio, as of March 31, 2023, it is the third biggest micro-finance institution in Southern India and the fifth largest NBFC-MFI overall.

The company's price-to-earnings (P/E) ratio, which is 30.3x at the upper end of the price range of Rs 277-291 per share, is higher than Equitas Small Finance (20.2x), Ujjivan Small Finance (9.3x), Bandhan (15.6x), Suryoday Small Finance Bank (21.7x), and Fusion Micro Finance (13.5x), but cheaper than listed competitors like CreditAccess Grameen (32.4x) and Spandana Spoorthi Financial (551.2x).

In terms of profits, the firm said that its net profit for FY23 increased fivefold to Rs 163.9 crore, while sales increased by 71.6% to Rs 1,428.8 crore in the same time.

Compared to the same period last year, the NBFC company's net profit increased 16.5 times to Rs 205.2 crore in the first half of FY2024, while net interest income increased 65.6%.

Anand Rathi, a brokerage business, thinks the company leads its market and is present across India. Anand Rathi believes that the firm would command a market worth of Rs 49,608 million post-issue at the top price range, which is fairly lucrative.

The company intends to use the proceeds of the public offering to strengthen its capital foundation in order to satisfy its anticipated future capital needs, which will come from the expansion of Muthoot Microfin's operations and asset base.