Ten things to consider before making an investment in the Rs 960 crore Muthoot Microfin IPO

 Ten things to consider before making an investment in the Rs 960 crore Muthoot Microfin IPO

Ten things to consider before making an investment in the Rs 960 crore Muthoot Microfin IPO

Muthoot Microfin Initial Public Offering (IPO): The Rs 960 crore offering consists of 2.61 crore shares issued and 0.69 crore shares put up for sale.

Subscriptions for the issue will be accepted starting on December 18.

Subscriptions for Muthoot Microfin Limited's public offering are expected to commence on December 18. The offer of Rs 960 crore comprises an offer for the sale of 0.69 crore shares, valued at Rs 200 crore, and an offer for 2.61 crore additional shares, valued at Rs 760 crore. On December 15, the offer's anchor book is set to open for a single day.

Prior to accepting the offer, be aware of the following 10 important points:

1. Dates of the IPO

On December 18, 2023, the IPO will go live for subscriptions, and it will end on December 20, 2023.

2. Cost Range

The issue's price range is set at Rs 277–291 per share.

3. Specifics of the Proposal

Through the IPO, the business hopes to raise Rs 960 crore. Up to 2.61 crore shares are included in the offer, and current owners, including investor Greater Pacific Capital WIV, who would sell shares valued at Rs 50 crore, are also offering to sell 0.69 crore shares. The promoters, Thomas John Muthoot, Thomas Muthoot, Thomas George Muthoot, Preeti John Muthoot, Remi Thomas, and Neena George, will sell the remaining shares, which are valued at Rs 150 crore.

The workers of Muthoot Microfin, situated in Greater Pacific Capital, have reserved shares valued at Rs 10 crore. These shares would be provided to them at a discount of Rs 14 per share from the final issue price.

4. The issue's goals

The proceeds will be used by the company to strengthen its capital basis in order to cover its anticipated future capital needs, which will come from the expansion of Muthoot Microfin's operations and asset portfolio.

5. Dimension of the Lot

Investors may place bids for multiples of 51 equity shares following the minimum of 51. Retail investors would thus need to spend a minimum of Rs 14,127 (51 (lot size) x 277 (lowest price band). The bid amount would rise to Rs 14,841 at the highest band.

6. Overview of the Company

The company targets rural parts of the nation and offers microloans to women clients. It is a division of the Muthoot Pappachan Group and was founded in 1992.

7. Monetary

For the year ending in March of FY23, the Kochi-based microfinance organization recorded a 246 percent year-over-year increase in net profit to Rs 163.9 crore, and a 71.6 percent increase in revenue to Rs 1,428.8 crore over the same time. In comparison to the same period last year, its profit after tax for the six months ended in September of FY2014 increased 16.5 times to Rs 205.2 crore, while net interest income increased 65.6% over the same period.

8. Executive Supervisor

The book running lead managers for the Muthoot Microfin IPO are ICICI Securities Ltd., Axis Capital Ltd., JM Financial Ltd., and SBI Capital Markets Ltd. The registrar for the offering is Kfin Technologies Ltd.

9. Danger

(i) The segment of the Indian microfinance market that is not often involved in other lending activities poses considerable dangers. As a consequence, their company, financial situation, and operational outcomes may suffer from a rise in the amount of non-performing assets and associated provisions and write-offs.

(ii) Since South India provides a significant amount of the lender's income, any unfavorable events there might have a negative impact on the company's operations, financial situation, cash flows, and overall business performance.

(iii) Interest rate risk affects the Company's operations, and volatility may negatively influence net interest income and net interest margin, which in turn affects Muthoot's operational performance.

10. The listing date

The proposed listing date for the Muthoot Microfin Initial Public Offering (IPO) is December 26, 2023, on both the BSE and NSE.