Initial Public Offering (IPO) of Delhi-NCR-based SBFC Finance Ltd, is a systemically important, non-deposit taking non-banking finance company (“NBFC-ND-SI”) offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals was subscribed 7.09 times on the second day of bidding.
The issue received bids of 94,61,07,760 shares against the offered 13,35,12,817 equity shares, at a price band of ₹54-57, according to the data available on the stock exchanges.
Non-Institutional Investors Portion was the most subscribed with a subscription of 12.95 times, followed by Qualified Institutional Buyer Portion with 6.71 times. Retail Portion was subscribed 4.93 times, whereas, Employee Portion was subscribed 2.44 times. The issue kicked off for subscription on Thursday, August 3, 2023 and will close on Monday, August 7, 2023.
A day prior to the opening of the issue, SBFC Finance Ltd had raised Rs 304 crore from anchor investors. Foreign Investors and Domestic Institutions who participated in the anchor were Abu Dhabi Investment Authority, Carmignac Portfolio, Axis Mutual Fund, Birla Mutual Fund, Loomis Sayles, Neuberger Berman among others. The anchor list also saw existing investors ICICI MF, SBI MF, HDFC MF, Amansa, Malabar and Steadview Capital.
Broking houses like HDFC Securities, SBI Securities, Nirmal Bang, Geojit Financial Services, BP Equities (StoxBox), Ventura Securities, Swastika Finance, Ashika Research, LKP Securites, Hensex Securities, and Marwardi Financial Services have given a “SUBSCRIBE” rating to the issue.
Brokerages unanimously recommend subscribing to the SBFC Finance Ltd. IPO. They view the Bank positively due to its lower valuation, consistent improvement in asset quality, and decent business performance. SBFC's focus on secured MSME loans, loans against gold, and unsecured loans, with a ticket size ranging from Rs. 0.5 million to Rs. 3.0 million, positions it favorably in the market. The company's strong portfolio quality metrics with declining Gross NPA and Net NPA ratios are noted by analysts. Moreover, SBFC's strategic loan portfolio diversification across states mitigates concentration risk and fuels growth. The IPO offers an opportunity to invest in a well-established company with a track record of financial stability, robust network to target customers, and favorable valuation compared to industry peers. Despite potential risks associated with key customer dependence and collateral price fluctuations, the overall outlook remains positive, making it an attractive investment option.
ICICI Securities Limited, Axis Capital Limited, and Kotak Mahindra Capital Company Limited are the book running lead manager and KFin Technologies Limited is the Registrar to the Offer. The Equity Shares are proposed to be listed on BSE and NSE.