Muthoot Microfin's Rs. 960 crore IPO opens for subscription
Muthoot Microfin's initial public offering (IPO) opened for subscription today. The issue aims to raise Rs. 960 crore and will be available for bidding until December 20. The company has already raised Rs. 285 crore from 26 anchor investors. The IPO includes a fresh issue of Rs. 760 crore and an offer-for-sale (OFS) of Rs. 200 crore, with shares priced between Rs. 277 and Rs. 291 apiece.
Offer details and utilization of proceeds
The OFS consists of shares from promoters Thomas John Muthoot, George Muthoot, Preethi John Muthoot, Remmy Thomas, and investor Greater Pacific Capital. Muthoot Microfin plans to use the net proceeds to strengthen its capital base and meet future capital requirements. According to RBI regulations, microfinance institutions must maintain a minimum capital adequacy of 15%, including tier-I and tier-II capital.
Financial performance and market position
As of March 2023, Muthoot Microfin's gross loan portfolio was Rs. 9,200 crore with 27.7 lakh active customers. In FY23, the company reported revenue of Rs. 1,430 crore and a profit of Rs. 164 crore. For the six months ending September 2023, revenue increased by 72% YoY to Rs. 1,042 crore, while profit surged to Rs. 205 crore. Muthoot Microfin ranks as the fourth-largest microfinance company in India and the third-largest in South India.
Analysts' recommendations on the IPO
Analysts recommend subscribing to the issue cautiously due to potential risks such as interest rate fluctuations and competition in the microfinance sector. Anand Rathi suggested a long-term "Subscribe" rating, citing the company's market leadership and fair valuations. Swastika Investmart advised a measured approach, acknowledging both potential and inherent risks. Canara Bank Securities recommended subscribing for listing gains, as the issue appears fairly priced compared to listed peers.
