NE BUSINESS BUREAU
AHMEDABAD, NOV 23
Fedbank Financial Services Limited IPO received subscribe recommendation from leading brokerage houses like Canara Bank Securities Limited, Anand Rathi, Asit C Mehta, Arihant Capital, BP Equities, etc. on Thursday.
Canara Bank Securities Limited IPO report said, “The NBFC has shown strong performance with Profit after Tax growing at 71% CAGR for FY2021-23. The MSME Industry has huge untapped potential along with increasing competition. The issue is available at 3.32x P/BVPS for FY2023 which appears fully priced with peers. Hence, we recommend to subscribe the issue for long term.”
Anand Rathi IPO report said, “The Company has a “Phygital” doorstep model, a combination of digital and physical initiatives, for providing customized services to their customers across all their products. This also helps them to constantly remain in touch with their customers. Valuation At the upper price band company is valued at P/BV of 2.5X with a market cap of ₹ 51,651 million post issue of equity shares. We believe that issue is fairly priced and recommend “Subscribe – Long Term” rating to the IPO.”
Asit C Mehta IPO report said, “The Indian retail credit market has experienced robust growth in recent years, increasing from Rs 30 trillion in Fiscal 2018 to Rs 60 trillion in Fiscal 2023, constituting 32% of the total systemic credit in India. The company primarily focuses on a collateralized lending model for its retail finance segment, targeting ESEI consumers and the emerging MSME sector. Fedfina possesses effective underwriting capabilities, supported by an experienced underwriting team and established processes. These processes assess the quality of potential customers’ business and collaterals, estimating the likelihood of defaults before disbursing loans. Fedfina’s ability to access diversified funding sources significantly contributes to its growth. As a technology-driven company, it utilizes digital infrastructure to manage a scalable and sustainable operating model. At the upper price band of Rs. 140/-, stock has valued at PB multiple of 2.52 of its FY23 book value. We recommend subscribing to the issue from a medium to long-term perspective.”
Arihant Capital IPO note said, “Fedfina has shown robust growth in their AUM over the last few years of over 35% YoY annual growth of AUM. The NBFCs business is distributed pan India with some concentration in the southern states, allowing space for future expansion to continue in newer geographies. Compared to its Peers in the similar business, on an annualized basis of Q1FY24 EPS, the issue is priced at 21x P/E ratio, which is fairly priced considering the growth in number of branches being opened over the last 1 year. The NBFC proposes to utilize the proceeds of the issue towards augmenting the Tier 1 capital to meet its future capital requirements. At the upper band of INR 140, the issue is valued at a P/B of 2.6x based on Q1FY24 book value and fresh issue of INR 6 bn considering the RoAA in Q1FY24 at 2.3%. We are recommending “Subscribe for Long Term” for this issue.”
The ongoing issue closes on Friday, November 24, 2023. The initial public offering comprises of a fresh issue of Equity Shares aggregating up to ₹ 600 crore (“Fresh Issue”) and an offer for sale up to 35,161,723 Equity Shares by selling shareholders (the “Offer for Sale” and together with the Fresh Issue, the “Offer”).
The company has also raised ₹324.67 crore at the upper price band of ₹140 per equity share (including premium of ₹ 130 per equity shares) with face value of ₹ 10 per share from 22 anchor investors. Key anchor investors include HDFC Mutual Fund, HDFC Life Insurance, SBI Life Insurance, Nippon Life India, Kotak Mahindra Life Insurance, Tata AIA Life Insurance, Bajaj Allianz Life Insurance, Societe Generale, Goldman Sachs (Singapore) PTE.
