Akme Fintrade India Ltd IPO | News | Overview | Verdict

IPO listed on 26 Jun'24

Akme Fintrade India Ltd

Minimum Investment

₹ 15,000 / 125 shares

Grey market premium

₹ 48 (40% premium)

Issue price

₹ 120

Listing price

₹ 127

Listing day %

11%

Listing on

Jun 26, 2024

Subscribe for listing gains

Akme Fintrade India Ltd (Akme) is a small-sized NBFC offering vehicle and business loans to rural and semi-urban customers. The COVID-19 pandemic significantly impacted the firm’s business in FY2021-22, and it has yet to reach pre-pandemic levels.
High NPAs and a low credit rating indicate potential challenges and the IPO valuation amplifies these concerns. Priced at a P/E ratio of 31x based on forecasted FY24 earnings post-IPO, the issue appears fully priced in the current market. However, a healthy grey market premium (GMP) suggests a strong debut on the bourses.
Given these factors, investors with a higher risk tolerance might consider subscribing to this IPO for listing gains. Long-term investors, however, may prefer to wait and monitor the company's performance over the next two quarters, as the inherent risks currently outweigh the potential benefits.

About the company

Founded in

5 Feb'96

Managing director

Nirmal Kumar Jain

Akme Fintrade India Ltd (Akme) is a non-banking financial company (NBFC) that focuses on vehicle and business loans, primarily targeting rural and semi-urban regions. Their offerings include Vehicle Finance and Business Finance Products designed for small business owners.
The firm has established its presence in four states—Rajasthan, Maharashtra, Madhya Pradesh, and Gujarat—through 12 branches and over 25 physical and digital points of presence, serving more than 200,000 customers. Its digital lending platform, www.aasaanloans.com, is currently under development and will be launched in a phased manner.

STRENGTHS

Targeting High-Potential Markets: Akme primarily serves rural and semi-urban regions, markets that are under-penetrated yet have significant growth opportunities. As of the end of December 2023, these areas represented 61.2% of its total credit portfolio.
Secured Loan Portfolio: All loans provided by Akme are secured with collateral and are repaid on a monthly or quarterly basis. The firm emphasizes stringent cash flow-based assessments of borrowers.
Strategic Financial Management: Akme has effectively diversified its fundraising sources and minimized borrowing costs through careful asset-liability management and efficient liquidity management. Further, it employs a hub and spoke strategy for business acquisition, enhancing its ability to understand and meet customer needs while also improving operational efficiencies and reducing costs.

RISK FACTORS

Pandemic Impact: The COVID-19 pandemic significantly affected Akme's business during FY21 and FY22, leading to a considerable decline in revenues, disbursements, and Assets Under Management (AUM). The firm has not yet returned to its pre-pandemic levels of business and earnings.
Geographical Concentration: Akme's operations are heavily concentrated in Rajasthan, which accounted for ~69% of its AUM as of the end of December 2023. With 6 out of 12 branches and 19 out of 25 Point of Sales (POS) located in the state, the firm is vulnerable to region-specific adversities, including geological, ecological, economic, or political disruptions.
Low Return on Equity (ROE): Akme's ROE stood at a modest 5.6% for the first nine months of FY24, which is considerably lower than that of its competitors such as Shriram Finance at 15.4%, CSL Finance at 13.1%, and MAS Financial Services at 10.6%.
Credit Rating Concerns: Akme’s credit rating is currently at ACUITE BBB / Stable, which is considered low. Any future downgrade could negatively affect Akme’s ability to service debts and raise additional funds.
Regulatory and Legal Challenges: Akme is currently dealing with various regulatory issues, litigations, and proceedings. Any unfavourable outcomes from these could have a significant adverse impact on the company.

Issue details

Issue type

Mainstream

Issue size

₹ 132 crore

Fresh Issue

₹ 132 crore

OFS

₹ -

Price range

₹ 114 - 120

Lot size

125 shares

Issue Objective

Akme intends to utilise the net proceeds from the issue to enhance its capital base to support anticipated future capital needs stemming from business and asset expansion. Additionally, a portion of the proceeds will be allocated to cover expenses related to the Issue.

Dates

Bidding open

19 Jun'24

Bidding close

21 Jun'24

Allotment date

24 Jun'24

Refund date

25 Jun'24

Listing

26 Jun'24

IPO Reservations

Qualified institutional buyers

<50%

Non-institutional investors

>15%

Retail individual investors

>35%

Read the Offer Document

This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.

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