SBFC Finance IPO: Know Price Band, Listing Dates And More
Introduction:
Every time a new Initial Public Offering (IPO) is announced, it creates a significant buzz among investors. A Non-Banking Financial Company (NBFC) – SBFC Finance – recently announced its IPO. Due to hit the markets on August 3, the company is expected to raise up to Rs. 1025 crores through the public offer. Continue reading to know the finer details of this IPO, including issue size, subscription dates, lot size, minimum investment amount, and more.
About SBFC Finance:
SBFC Finance Limited is a recognised, systematically important non-deposit-taking Non-Banking Financial Corporation (NBFC-ND-SI) incorporated in 2008. The company provides secured business loans and loans against gold, with most of its borrowers being micro, small, and medium-scale enterprises (MSMEs) and working-class individuals.
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As of March 31, 2023, SBFC Finance had 152 branches across 120 cities around India and was catering to 1,02,722 customers. The Average Ticket Size (ATS) of secured business loans, loans against gold, and other unsecured loans stood at Rs. 9 lakhs, Rs. 90,000, and Rs. 6.9 lakhs respectively. For FY 2023, the net interest earnings of the company had grown by 49% to Rs. 379 crores. The Net Interest Margin (NIM) stood at a healthy 9.3%.
Key strengths of SBFC Finance:
- It has a pan-India presence with 152 branches across 120 cities. An extensive network allows the company to cater to diversified customers
- It operates through 100% in-house sourcing, resulting in favourable business revenues
- It boasts a robust credit assessment, underwriting, and risk management framework
- It employs an extensive om-ground collection team to minimise the growth of Non-Performing Assets (NPAs)
- It exhibited a notable track record of growing its Assets Under Management (AUM) in the last three financial years
Key weaknesses/risks associated with the company:
- The company struggles with geographic penetration across the country. About 70% of the AUM comes from six states
- Being a lending institution, the company is prone to non-payment or default by borrowers
- The company’s business is bound by certain legal and regulatory proceedings
- Any changes in the repo rate and other factors may impact the company’s profit margin
- The business model is subjected to frequent inspections by the Reserve Bank of India (RBI)
Financial Snapshot Of SBFC Finance:
The financials of SBFC Finance company as per the Draft Red Herring Prospectus (DRHP) it has filed with the Securities and Exchange Board of India (SEBI) are highlighted in the table below:
| Particulars | As of and For FY Ending March 31 | ||
| 2023 | 2022 | 2021 | |
| Net Worth | 1467 | 1027 | 945 |
| AUM | 4943 | 3192 | 2221 |
| Total Income | 740 | 531 | 512 |
| Net Interest Income | 379 | 254 | 227 |
| Profit After Tax | 150 | 65 | 85 |
| Net Interest Margins | 9.30% | 9.40% | 11.70% |
| Net NPA | 1.40% | 1.60% | 2.00% |
| Earnings Per Share (Diluted) | 1.6 | 0.8 | 1.1 |
| Return on Equity | 12% | 7% | 10% |
| Return on Average Assets | 3% | 2% | 2% |
*Amount in Crores
As you can see in the table mentioned above, the total AUM of the company has more than doubled from Rs. 2221 crores to Rs. 4943 crores between FY 2021 and FY 2023. With the NBFC planning to expand its footprints, the AUM volume is expected to surge further.
Although there was a slight dip in the net profit of the company in FY 2022 from the previous financial year, it showed considerable growth in FY 2023
The company’s Net Interest Margin (NIM) has remained stable. It has also maintained its Non-Performing Assets (NPAs) appreciably.
Details of the IPO
| IPO Details | |
| IPO Date | Aug 3, 2023 to Aug 7, 2023 |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
| Face Value | Rs 10 per share |
| Price | Rs 54 to Rs 57 per share |
| Lot Size | 260 Shares |
| Total Issue Size | Rs 1,025.00 Cr |
| Fresh Issue | Rs 600.00 Cr |
| Offer for Sale | Rs 425.00 Cr |
| Employee Discount | Rs 2 per share |
| IPO Reservation | |
| Qualified Institutional Buyer (QIB) | Miximum of 50% of the Net Issue |
| NII (HNI) | At least 15% of the Net Issue |
| Retail Investors | At least 35% of the Net Issue |
The company plans to augment its capital base from the IPO proceeds.
The final word
Amid a flurry of IPOs, you need to maintain proper diligence while making investment decisions. With constantly expanding footprints and controlled NPA size, SBFC Finance Company looks poised for long-term growth. If you are investing for listing gains, your decision should be based on the prevailing grey market premium (GMP) and market conditions on the subscription date.
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