The Indian IPO market is expected to make rapid strides in the second half of 2023. Several companies are due to launch their Initial Public Offerings (IPO) during this period to raise capital from equity sales. For investors, this is an opportunity to acquire shares of growing companies.
In this article, we are going to talk about one such upcoming IPO in 2023 – Muthoot Fincorp Limited. It is the microfinance arm of the prestigious Muthoot Pappachan Group. Let’s see if this IPO warrants your attention.
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Muthoot Fincorp Limited is one of the leading Non-Banking Financial Companies (NBFCs) in India engaged in the business of gold loans. The company is a part of the Muthoot Pappachan Group, which operates in diverse business verticals, including real estate, hospitality, and power generation.
As of 31st March 2022, Muthoot Fincorp Ltd. was the third-largest gold loan player in India, with 3,657 branches across 24 states and union territories. The gold loan portfolio of the company comprised approximately 33.12 lakhs of loan accounts.
Apart from the gold loan business, Muthoot Fincorp Ltd. is also engaged in the business of wind energy and real estate.
Muthoot Fincorp Ltd. has given pretty good financial performances over the last few years. The company's net worth has increased from Rs. 2,954 crores to Rs. 3,449 crores between FY 2019-20 and FY 2021-22. The tax-adjusted profit of the company for FY 2021-22 stood at Rs. 413 crores. These figures prove the company has delivered consistent performances surpassing all expectations.
The company’s ability to access cost-effective working capital and effective optimization of management costs have been instrumental to its success. The table below depicts Muthoot Fincorp Ltd.’s financials as per the Draft Red Herring Prospectus (DRHP):
|Particulars||As of and For FY Ending March 31|
|Revenue From Operations||4354||4100||3762|
|Profit After Tax||413||397||258|
*Amount in Crores
As per the DRHP filed by Muthoot Fincorp Ltd. with the market regulator, it plans to raise approximately Rs. 1,800 crores through its IPO. Although the IPO's issue dates and other details are yet to be announced, it is expected to hit the markets in the fourth quarter of 2023. 50% of the IPO would be reserved for Qualified Institutional Buyers (QIBs), 35% for retail investors, and 15% for Non-Institutional Buyers (NIBs).
With the money raised from the IPO, the company plans to:
Consistent financial performances and a large customer base are enough to warrant a subscription for the Muthoot Fincorp Ltd. IPO. However, as an investor, you must be wary of the company’s weaknesses and market-related risks before making the final move. All in all, this IPO could be a good bet to fetch decent medium to long-term returns.
If you want to open a Demat account for subscribing to this IPO, you can use Motilal Oswal's help.