Muthoot Microfin's Rs 960-crore IPO opens. Should you subscribe to this issue?

economictimes.indiatimes.com:

IPO) of Muthoot Microfin opened for subscription today and will be available for the public to bid till December 20. The company has bagged Rs 285 crore from 26 anchor investors ahead of the issue.

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.

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.

IPO Review

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.

«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 for 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.

«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