IPO closes on 31 Jul'25
Laxmi India Finance Ltd
Minimum Investment
₹ 14,852 / 94 shares
Grey market premium
₹ 7 (4% premium)
Our Verdict:
Neutral
- Laxmi India Finance Ltd (LIFL) has built a strong niche in MSME and vehicle financing, especially across underbanked rural and semi-urban areas. The NBFC has shown robust growth in AUM and profitability, reflecting solid execution in its core lending segments.
- However, the elevated borrowing costs and a deterioration in asset quality during FY25 raise concerns about sustainability. The continued reliance on promoter guarantees further adds to the risk profile.
- In terms of valuation, the IPO appears fully priced at a P/E of 18x based on FY25 earnings, limiting near-term upside.
- Given the current valuation and operating metrics, we recommend staying on the sidelines for now. Investors should keep this stock in radar post-listing and look for better entry opportunities if the company shows sustained improvement in ROA and asset quality.
About the company
Founded in
10 May'96
Managing director
Deepak Baid
- LIFL is a non-deposit-taking NBFC that focuses on providing secured credit to small businesses and individual borrowers, primarily in underserved rural and semi-urban regions. Its loan portfolio is diversified across MSME, vehicle and construction loans. As of March 31, 2025, MSME and vehicle loans accounted for over 92% of the total AUM (Assets under Management).
- LIFL operates through a network of 158 branches across 5 states—primarily Rajasthan—and is supported by 47 lenders, including public and private sector banks, Small Finance Banks (SFBs) and other NBFCs.
STRENGTHS
- Robust AUM Growth: LIFL's AUM have grown at a remarkable CAGR of 36%, reaching Rs 1,277 crore as of March 2025, reflecting substantial growth from March 2023.
- Strong Financial Performance: LIFL has delivered impressive financial results, with a CAGR of 38% in total income and 50% in net profit from FY23 to FY25.
- Return Ratios: LIFL demonstrates a Return on Average Total Assets (RoTA) of 3% and a Return on Average Net Worth (RoNW) of 15.66% for FY25, positioning it with the second-highest RoNW among its peers.
- Expanding Branch Network: With 158 branches as of FY25, up from 119 in FY23, LIFL is actively expanding its footprint by strengthening its presence in existing markets, entering new geographies and increasing penetration in high-potential regions.
- Asset Quality: Despite a slight deterioration in FY25, LIFL maintains a sound asset profile with Gross NPA at 1.07% and Net NPA at 0.48%. The NBFC focuses on small-ticket, secured loans (Rs 0.05–2.5 million), which reduces default risk.
RISK FACTORS
- High Exposure to MSME Sector: Approximately 76% of LIFL’s AUM in FY25 was concentrated in the MSME segment. While this focus is a strength, it also increases vulnerability to sector-specific risks such as economic slowdowns, regulatory changes or intensified competition, which could disproportionately impact performance.
- Geographic Concentration: LIFL’s operations are heavily concentrated in three states—Rajasthan (58% of AUM), Madhya Pradesh (22%) and Gujarat (15%) as of March 2025. Any adverse economic, political or regulatory developments in these regions could materially affect the business.
- Negative Cash Flows: LIFL has faced negative cash flow from operations for the past three fiscal years. Continued negative cash flows could jeopardize business continuity and financial stability.
- High Cost of Borrowing: As of March 31, 2025, LIFL’s average cost of borrowing stood at 12.02%—one of the highest in its peer group. This relatively high funding cost may compress lending margins and could limit the company’s ability to offer competitively priced products, potentially impacting growth and profitability.
- High Proportion of First-Time Borrowers: First-time borrowers accounted for 37.1% of the customer base. Many of these clients may lack formal credit histories or income documentation, increasing the difficulty of credit assessment and the risk of delinquencies.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 254.26 crore
Fresh Issue
₹ 165.17 crore
OFS
₹ 89.09 crore
Price range
₹ 150 - 158
Lot size
94 shares
Issue Objective
The net proceeds from the fresh issue will be utilized to strengthen the company’s capital base, enabling it to meet future capital requirements for onward lending.
Dates
Bidding open
29 Jul'25
Bidding close
31 Jul'25
Allotment date
1 Aug'25
Refund date
4 Aug'25
Listing
5 Aug'25
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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