"Fusion Micro Finance IPO Motilal Oswal |"

Fusion Micro Finance IPO

Opening Date  02, November 2022
Closing Date 04, November 2022
Refund Initiation 11, November 2022
Listing Date 15, November 2022
Face Value ₹10 per equity share
IPO Price Band ₹350 to ₹368 per equity share
Minimum Order Quantity 40 Shares
Issue Size ₹1,103.99 Cr

 

The month of October 2022, saw a couple of IPOs getting listed in the secondary market. These were Electronics Mart India Ltd and Tracxn Technologies Ltd. Whereas Electronics Mart India Ltd proved to be a once in a lifetime opportunity, generating 43% listing gains, Tracxn Technologies also performed superbly, listing at 17% returns. The retail subscription for these IPOs saw an overwhelming response, describing that retail investors are eager to to invest. After Electronics Mart India Ltd, which received a whopping 20.77 times subscription from retail investors, all eyes are now aimed at Fusion Microfinance, which is going live with its IPO on 02nd November. Let’s learn in detail all its financials and if this IPO is worth investing in or not!

About the Company -

Fusion Microfinance is an NBFC which provides financial services to women entrepreneurs, typically coming from socially and economically deprived sections of the society. The company does not only offer financial assistance, but also manages the finances by disseminating financial literacy to its clients.

The company was incorporated in the year 1994, and is one of the youngest companies among the top 10 NBFC-MFIs in India in terms of AUM as of June 30, 2022. As of the date (June 2022), the company has 2.90 million active borrowers, a network of 996 branches and 9,262 permanent head-count of employees spread across 19 states and union territories in India.

The company's business runs on a joint liability group-lending model, wherein a small number of women form a group (typically comprising five to seven members) and guarantee one another's loans.

The financials of the company for the last three years are detailed as below - 

Particulars Three month period ended June 30, 2022 As of and for the Financial Year ended March 31
2022 2021 2020
Equity share capital 83 83 79 79
Networth 1416 1338 1246 1199
Gross AUM 7389 6786 4638 3607
Disbursements 1983 6180 3710 3574
Revenue from Operations 343 1151 856 720
Profit/ (Loss) after Tax  75 22 44 70
Net Interest Income 185 561 431 312
Net Interest Margin - 8.39% 9.22% 8.85%
Return on Net Worth 5.30% 1.63% 3.53% 5.81%
Earnings per share (₹/share, diluted) 9 2.6 5.5 10.3
Net NPA 1.35% 1.64% 2.20% 0.38%

(all numbers stated are in crores)

Fusion Microfinance details -

Let’s now move onto the main part of this article. Here, we’re going to be looking at some of the most important details of this upcoming IPO viz - Fusion Microfinance date and its share price.

Fusion Microfinance date -

According to the Red Herring Prospectus filed by the company, the public issue of the equity shares is going live from November 02 and will be available for subscription until November 04, 2022.

Fusion Microfinance issue size -

The total issue size of the latest Fusion Microfinance is declared to be ₹1,103.99 crores. This is a mix of a fresh issue, and an offer for sale. The company is offloading 13, 695,466  shares in OFS and is raising ₹600 crores via fresh issue.

50% of the offer is for QIBs (Qualified Institutional Buyers), 35% for retail investors, and the balance 15% for NIBs (Non-institutional Investors).

Fusion Microfinance share price

The price band of the company’s upcoming IPO is declared to range between ₹350 to ₹368 per equity share

Fusion Microfinance listing

Since the IPO of Fusion Microfinance is from the mainboard, it would be listed on both - the National Stock Exchange (NSE) as well as the Bombay Stock Exchange (BSE)

Fusion Microfinance objectives

The net proceeds of the Issue, i.e. gross proceeds of the Issue (“from Fresh Issue”) are proposed to be utilized in the following manner:

  • To augment the capital base of the company
  • General Corporate Purposes

Fusion Microfinance Strengths

  • Well Diversified and Extensive Pan-India presence
  • Robust underwriting process resulted in healthy  portfolio quality ; Net NPA was 1.35% Q1FY23
  • Proven Execution capabilities with strong rural focus (71% customers from rural areas)
  • 2nd largest NBFC-MFI in India in terms of Gross loan portfolio with market share of 7.1% (Q1FY22)
  • 3rd fastest clientele growth of 27% in FY22 among the top NBFC-MFIs

Fusion Microfinance risks

  • Derives 50% of gross AUM from Bihar , UP & Odisha
  • Every Microfinance company faces unique risks due to the category of customers it lends to
  • Large portion of collections & disbursements are in cash, exposing certain operational risks
  • Industry is interest rate sensitive & highly regulated

Conclusion

If you wish to become a part of this exciting IPO opportunity, you will need to have an online demat and trading account, which will help you get shares of your favorite companies. To get an online DEMAT account for Free*, all you have to do is sign-up with Motilal Oswal and get started.

If you are an existing customer with Motilal Oswal, you can now invest in the IPOs in just one click through UPI payment!

It’s all easy. It’s all good.

 

Related articles: 5 Tips for Investing In IPOs | What's the big deal about IPOs | Clearing the confusion from IPOs | IPO in India- The future looks bright | Upcoming IPO

 

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