IPO listed on 16 Aug'23
SBFC Finance Ltd
Minimum Investment
₹ 14,820 / 260 shares
Grey market premium
₹ 39 (68% premium)
Issue price
₹ 57
Listing price
₹ 82
Listing day %
62%
Listing on
August 16, 2023
Our Verdict:
Subscribe
- SBFC Finance stands out as a rapidly growing NBFC with robust earnings growth and a stable asset quality. Moreover, the bullish sentiment surrounding the banking and NBFC sectors provides a strong backdrop, and SBFC is well-placed to leverage the prevailing macroeconomic tailwinds.
- From a valuation standpoint, the IPO is priced at a PE multiple of 40.4x, with price to book value ratio at ~3.5x, which is slightly below the industry average of 4x, thus suggesting potential upside for new investors participating in the IPO. Additionally, the grey market premium (GMP) for the issue, often used as a gauge for investor sentiment, indicates a premium listing.
- Considering these factors, we recommend a ‘Subscribe’ rating to this IPO for healthy listing gains.
- For a longer-term horizon, though, investors might find more security in higher-tier NBFCs that carry 'AA' and 'AAA' ratings as opposed to SBFC, which holds an 'A+' long-term rating. Despite its rapid growth phase, the company's Return on Equity has lingered in the single digits over the last three financial years, and there has been a concerning decrease in the Net Interest Margin. These trends do warrant caution.
About the company
Founded in
25 Jan'08
Managing director
Aseem Dhru
- SBFC Finance is a systemically important, non-deposit taking NBFC that provides loans. These include secured loans to Micro, Small, and Medium Enterprises (MSMEs) and loans against gold, concentrating on amounts ranging from Rs 5 lakh to Rs 30 lakhs.
- As of March 31, 2023, the company has extended its reach to 120 cities across 16 states and 2 Union Territories in India, operating through a network of 152 branches.
STRENGTHS
- Robust earnings: SBFC has demonstrated impressive growth over the past two years. Its operating revenue has seen a CAGR of 20%, reaching Rs 732.8 crore in FY23. Net profit grew at a CAGR of 33%, reaching Rs 149.7 crore in FY23.
- Impressive AUM Growth: Among the MSME-centric NBFCs in India, SBFC stands out with one of the highest Assets Under Management (AUM) growth rates, boasting a CAGR of 44% from Fiscal 2019 to Fiscal 2023.
- Solid Disbursement Growth: The company has recorded a robust disbursement growth of 40% CAGR between Fiscal 2019 and Fiscal 2023.
- Decreasing Trend in NPAs: The Net Non-Performing Assets (NPAs) have consistently declined, moving from 1.95% in FY21 to 1.63% in FY22, and further to 1.41% in FY23.
RISK FACTORS
- Reduction in NIM: SBFC's Net Interest Margin experienced a significant decrease, falling from 11.73% in FY21 to 9.39% in FY22, and further declining to 9.32% in FY23.
- Low return ratios: The company's average Return on Equity (6.6%) and Return on Assets (1.9%) over the past three fiscal years are much lower than the industry standards, which are 13.5% and 3.8%, respectively.
Issue details
Issue type
Mainstream
Issue size
₹ 1,025 crore
Fresh Issue
₹ 600 crore
OFS
₹ 425 crore
Price range
₹ 54 - 57
Lot size
260 shares
Issue Objective
Net proceeds of the fresh issue will be utilised towards augmenting the Company's capital base to meet their future capital requirements arising out of growth of business and assets.
Dates
Bidding open
3 Aug'23
Bidding close
7 Aug'23
Allotment date
10 Aug'23
Refund date
11 Aug'23
Listing
16 Aug'23
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)
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.