Muthoot Microfin IPO: Retail portion fully subscribed on Day 1. Check GMP and other details
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Synopsis
The IPO comprises a fresh issue of Rs 760 crore and an offer-for-sale (OFS) of Rs 200 crore. Under the OFS, promoters Thomas John Muthoot, George Muthoot, Preethi John Muthoot, Remmy Thomas, and investor Greater Pacific Capital will offload shares.
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The Rs 960-crore initial public offering (IPO) of Muthoot Microfin was subscribed 82% on Day 1 of the bidding process on Monday.
The IPO comprises a fresh issue of Rs 760 crore and an offer-for-sale (OFS) of Rs 200 crore. Under the OFS, promoters Thomas John Muthoot, George Muthoot, Preethi John Muthoot, Remmy Thomas, and investor Greater Pacific Capital will offload shares.
Ahead of the IPO, the company has bagged Rs 285 crore from 26 anchor investors.
According to market analysts, the current GMP of Muthoot Microfin is Rs 85 in the unlisted market.
Muthoot Microfin is the fourth largest microfinance company in India in terms of gross loan portfolio. It is the third largest in south India, with the largest in Kerala in terms of market share, and a key player in Tamil Nadu with an almost 16% share.
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Analysts suggested investors can subscribe to the issue but with caution. The company can be vulnerable to interest rate fluctuations and likely competition within the microfinance space.
"Despite some risks, Muthoot Microfin's attractive valuation, with a P/E of 20.50x and a P/BV of 2.09x, positions it favorably in the current market landscape. Therefore, we recommend considering this IPO with a measured approach, acknowledging both its potential and inherent risks," said Swastika Investmart.
Price Band
Muthoot Microfin is offering its shares in the range of Rs 277-291 apiece with a face value of Rs 10 per share. Investors can bid for a minimum of 51 shares in one lot.
As of March 2023, Muthoot Finance's gross loan portfolio stood at Rs 9,200 crore, and it had 2.77 million active customers. For FY23, the company reported a revenue of Rs 1430 crore and a profit of Rs 164 crore.
In the six months ended September 2023 period, the company's revenue increased 72% YoY to Rs 1,042 crore, while profit jumped multifold to Rs 205 crore.
IPO proceeds
The microfinance firm aims to augment its capital base through the proceeds from the initial public offering. As per the RBI regulations, microfinance institutions are required to maintain a minimum capital adequacy of 15% consisting of tier-I capital and tier-II capital.
Book-running lead managers
ICICI Securities, Axis Capital, JM Financial, and SBI Capital Markets are the book-running lead managers to the issue.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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The retail investors category was fully subscribed. The issue was subscribed to 60% in the NII category. There were no bids from qualified institutional buyers so far.The IPO comprises a fresh issue of Rs 760 crore and an offer-for-sale (OFS) of Rs 200 crore. Under the OFS, promoters Thomas John Muthoot, George Muthoot, Preethi John Muthoot, Remmy Thomas, and investor Greater Pacific Capital will offload shares.
Ahead of the IPO, the company has bagged Rs 285 crore from 26 anchor investors.
According to market analysts, the current GMP of Muthoot Microfin is Rs 85 in the unlisted market.
Muthoot Microfin is the fourth largest microfinance company in India in terms of gross loan portfolio. It is the third largest in south India, with the largest in Kerala in terms of market share, and a key player in Tamil Nadu with an almost 16% share.
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"The company has a market leadership with a pan India presence. Also, it is a part of the prestigious Muthoot Pappachan group. We believe that valuations of the company are fairly priced and recommend a Subscribe-Long Term rating to the IPO," said Anand Rathi."Despite some risks, Muthoot Microfin's attractive valuation, with a P/E of 20.50x and a P/BV of 2.09x, positions it favorably in the current market landscape. Therefore, we recommend considering this IPO with a measured approach, acknowledging both its potential and inherent risks," said Swastika Investmart.
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"The issue is available at a P/BVPS of 2.6x, which appears fairly priced as compared to listed peers. Hence, we recommend subscribing to the issue for listing gains," said Canara Bank Securities.Price Band
Muthoot Microfin is offering its shares in the range of Rs 277-291 apiece with a face value of Rs 10 per share. Investors can bid for a minimum of 51 shares in one lot.
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FinancialsAs of March 2023, Muthoot Finance's gross loan portfolio stood at Rs 9,200 crore, and it had 2.77 million active customers. For FY23, the company reported a revenue of Rs 1430 crore and a profit of Rs 164 crore.
In the six months ended September 2023 period, the company's revenue increased 72% YoY to Rs 1,042 crore, while profit jumped multifold to Rs 205 crore.
IPO proceeds
The microfinance firm aims to augment its capital base through the proceeds from the initial public offering. As per the RBI regulations, microfinance institutions are required to maintain a minimum capital adequacy of 15% consisting of tier-I capital and tier-II capital.
Book-running lead managers
ICICI Securities, Axis Capital, JM Financial, and SBI Capital Markets are the book-running lead managers to the issue.
(You can now subscribe to our ETMarkets WhatsApp channel)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
