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Muthoot Microfin IPO Check Price Band Issue Dates Lot Size And More

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Published Date: 08 Feb 2024Updated Date: 15 Jan 20256 mins readBy MOFSL
Muthoot IPO

Introduction:

The year 2023 marked a phenomenal period for investors in the Indian stock market. Not only did both Nifty and Sensex consistently surpass their historical peaks, but a surge of Initial Public Offerings (IPOs) flooded the markets, resulting in substantial gains upon listing. As we approach the year-end, numerous companies are seizing the bullish market conditions to launch their IPOs.

Among the notable mainboard companies debuting in the primary markets in December 2023 is Muthoot Microfin Limited. Notably the third-largest NBFC-MFI in South India in terms of gross loan portfolio, the company plans to raise up to Rs. 960 crores through its IPO, comprising a combination of a fresh issue and an offer for sale. Keep reading to learn more about the Muthoot Microfin IPO and decide whether to invest in it.

About Muthoot Microfin Limited

Incorporated in 1998, Muthoot Microfin Limited operates as a Non-Banking Financial Corporation – Microfinance Institution (NBFC-MFI). The company offers small-ticket loans specifically to women borrowers with a special focus on the rural parts of Southern India. It is the third-largest NBCFC-MFI in South India in terms of gross loan portfolio and the largest in Kerela and Tamil Nadu in terms of market share. 

As of 31 March 2023, the company had a gross loan portfolio of Rs. 10,867 crores with approximately 31.9 lakh active customers. Its total disbursals stood at Rs. 35,041 crores through 1.172 branches across India. The company’s market share in Tamil Nadu stood at 16% (as per the CRISIL report).

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Key Strengths of the Company

Examining the fundamental strengths of the issuing company is crucial for gaining insights into its prospective growth and making well-informed decisions regarding an IPO investment. As outlined in the Red Herring Prospectus (RHP), Muthoot Microfin Ltd. boasts several key strengths, including:

  • The company is the third-largest NBFC-MFI in South India and fifth-largest in India in terms of gross loan portfolio
  • The company primarily focuses on providing micro-loans to women borrowers, specifically in rural areas
  • In the preceding five years, the company has expanded its operational footprint to North, East, and West India, thereby diversifying its customer base
  • The company's loans are protected through credit-linked life insurance policies and natural calamity insurance through the Muthoot Pappachan Group
  • The company borrows its working capital from diversified sources, including public and private banks, Non-Convertible Debentures (NCDs), etc.
  • The company has implemented a streamlined operating model, leveraging technology effectively for enhanced efficiency

Key Risks or Weaknesses

Examining the risks and vulnerabilities of the issuing company provides valuable insights into potential threats that could impede its long-term growth. The key risks and weaknesses associated with Muthoot Microfin Ltd. include:

  • The company derives a major portion of its revenue from South India, specifically Kerela, Karnataka, and Tamil Nadu. Unfavourable business conditions in these states may impact the business severely
  • The microfinance business in India is prone to specific risks and challenges attributed to the demographic profile of its clientele. For example, the risk of Non-Performing Assets (NPAs)
  • Fluctuations in the lending rates or repo rates of the Reserve Bank of India (RBI) may impact the company’s profit margin
  • As of 31 March 2023, the company possessed high debts of approximately Rs. 5,123 crores
  • Directors, promoters, and group companies are involved in multiple legal proceedings

Exciting opportunities ahead: Don’t forget to apply for Upcoming IPOs!

Core Financials of the Company

The company’s revenue and net worth have grown robustly and steadily in the last three years. The profit after tax has increased from Rs. 7 crores in FY21 to Rs. 164 crores in FY23. The return on equity (ROE) for FY23 stood at 11%. Refer to the table below for further details on the financials of Muthoot Microfin Ltd. for the last three financial years:

Particulars For the Period Ended Sept 2023 As of and for FY Ended March 31
2023 2022 2021
Share Capital 140 140 133 114
Net Worth 1,842 1,626 1,337 890
Total Borrowings 7,746 6,493 3,997 3,016
Revenue From Operations 1,042 1,429 833 684
EBITDA Adjusted 706 788 426 327
Profit After Tax 205 164 47 7
Earnings Per Share (Diluted) 14 12 4 1
Return on Equity 12% 11% 4% 1%

*Amount in Crores

Source – RHP dates 11 December on the SEBI website

Details of the IPO

Muthoot Microfin IPO opens for public subscription on Monday, 18 December 2023 and closes on Wednesday, 20 December 2023. It will comprise both a fresh issue and an offer for sale with a total issue size of Rs. 960 crores. The table below illustrates additional IPO details:

IPO Date 18 December to 20 December 2023
Basis of Allotment 21-Dec
Listing Date 26-Dec
Face Value Rs. 10 per share
Price Band Rs. 277 to Rs. 291
Lot Size 51 shares
Total Issue Size Rs. 960 crores
Fresh Issue Rs. 760 crores
Offer for Sale Rs. 200 crores
Issue Type Book Built Issue
Listing At NSE, BSE

To conclude

The financials of the issuing company and attractive valuation make Muthoot Microfin IPO a lucrative bet. But before investing, you must consider your financial goals, risk appetite, and the prevailing market conditions.

 

Related Articles:  How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application 

 

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