SBFC Finance IPO to open on Wednesday. What GMP signals ahead of subscription?
IPO) of SBFC Finance will open for public subscription on August 3. The issue will be available till August 7. The anchor investor allocation will be done later in the day.
Ahead of the subscription, the company's shares are fetching a robust premium of Rs 40 in the unlisted market, indicating healthy demand from investors. SBFC Finance is a non-deposit-taking, non-banking financial company offering loans including secured MSME loans and loans against gold. The IPO, which comprises fresh equity issue of up to Rs 600 crore and an offer for sale (OFS) of up to Rs 425 crore, is priced in the range of Rs 54-57 per share.
At the higher price band, analysts value the stock at 2.4x P/BVPS with a current book value per share of Rs 23. Investors can bid for a minimum of 260 shares and in multiples thereafter. About 50% of the offer is reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NII), and the rest 35% for retail investors.
The proceeds from the fresh issuance worth Rs 600 crore will be used to boost its capital base to meet future capital requirements. The company's majority of borrowers are entrepreneurs, small business owners, and self-employed individuals among others. Among MSME-focused NBFCs in India, it has one of the highest assets under management growth, at a CAGR of 44% in the period from FY19-23.
The company has witnessed spread expansion from 7% in FY21 to 7.7% in FY23 despite monetary tightening due to effective re-pricing of loans as well as improved rating profile which has kept cost of funds under check. For the year ending March 2023, the company's revenues were Rs 740 crore. The profit for the period was Rs 149.7 crore.
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