- We believe that valuations of the company is fairly priced and recommend a “Subscribe-Long Term” rating to the IPO: Anand Rathi
- We assign “Subscribe” rating to this IPO as the company has rural focused operations with a robust risk management framework: Marwadi Financial Services
- The company has exhibited a strong two-year CAGR growth of 36% in terms of gross loan portfolio from FY2021 to FY2023 along with strong yields: Canara Bank Securities
- The issue opens on Monday, December 18, 2023 and will close on Wednesday, December 20, 2023
NE BUSINESS BUREAU
AHMEDABAD, DEC 18
Muthoot Microfin Limited (MML) IPO received subscribe recommendation from leading brokerage houses like Anand Rathi, Marwadi Financial Services, BP Equities, etc.
Muthoot Microfin Ltd. (MML), a microfinance institution promoted by the Muthoot Pappachan Group, specializes in providing micro-loans to women customers, primarily for income generation in rural areas of India. As of March 31, 2023, MML ranks as the 5th largest NBFC-MFI in India based on its gross loan portfolio. Additionally, it holds the position as the 3rd largest NBFC-MFI in South India by gross loan portfolio and is the leading microfinance institution in Kerala with the highest market share. MML is also a significant player in Tamil Nadu, holding an almost 16% market share. The company serves 0.32cr active customers through 1,340 branches across 339 districts in 18 states and union territories in India, as of September 30, 2023.
Anand Rathi report said, “The company has a market leadership with a pan India presence. Also, the company is a part of prestigious Muthoot Pappachan group. At the upper price band company is valued at P/BV of 2.2X with a market cap of ₹49,608 million post issue of equity shares. We believe that valuations of the company is fairly priced and recommend a “Subscribe-Long Term” rating to the IPO.”
Marwadi Financial Services report said, “We assign “Subscribe” rating to this IPO as the company has rural focused operations with a robust risk management framework and strong brand recall and synergies with the Muthoot Pappachan Group. Also, it is available at reasonable valuation as compared to its peers.”
BP Equities report said, “As the lender will utilize the net proceeds of the fresh equity shares issue to augment its Tier-I capital base, its capital adequacy will enhance and lead to a stable leverage position. At the current P/BV multiple of 2.3x, we believe the company is fairly valued and advise investors to “Subscribe” from a medium to long-term perspective.”
Canara Bank Securities said, “The company has exhibited a strong two-year CAGR growth of 36% in terms of gross loan portfolio from FY2021 to FY2023 along with strong yields. The asset quality has improved over the years post removal of moratorium with GNPA ratio of 2.97% and NNPA ratio of 0.60% as on March 2023. Net interest margin has improved from 11.60% in FY2023 to 12.39% in H1FY2024 due to better borrowing mix. The profit has increased from 7.1 cr in FY2021 to 163.9 crores in FY2023 due to improvement in cost to income ratio and better borrowing mix. Capital adequacy ratio stands at 20.46% as on September 2023, which is strong to support the increasing micro finance penetration. The issue is available at P/BVPS of 2.6x which appears fairly priced as compared to peers. Hence we recommend the issue for listing gains.”
Swastika report said, “Despite the aforementioned risks, MML’s attractive valuation, with a P/E of 20.50x and a P/BV of 2.09x, positions it favorably in the current market landscape. Therefore, we recommend considering this IPO with a measured approach, acknowledging both its potential and inherent risks.”
Geojit research report said, “Based on its diversified lending products, focus on digital transformation, and expanding geographical footprint, we assign a “Subscribe” rating for MML on a medium- to long-term basis.”
The issue opens on Monday, December 18, 2023 and will close on Wednesday, December 20, 2023. The Company plans to raise funds through initial public offering with total offer size aggregating to ₹960 crore. The total offer size comprises of fresh issue of Equity Shares aggregating to ₹760 crore and offer of Equity Shares aggregating to ₹200 crore by the selling shareholders. The price band of the offer has been fixed at ₹277 to ₹291 per equity share. Bids can be made for a minimum of 51 equity shares and in multiples of 51 equity shares thereafter.
The company has also raised Rs. 284.99 crore from 26 anchor investors by allotting 97,93,812 equity shares at the upper price band of Rs. 291 per equity share. Key anchor investors include, Morgan Stanley Asia (Singapore) Pte. , WCM International, JNL Multi Manager International, Clearwater International, ICICI Prudential Life Insurance, HDFC Life Insurance, Bajaj Allianz Life Insurance, Muthoot Finance Limited, SBI General Insurance, Kotak Mahindra Life Insurance, ICICI Lombard General Insurance, Reliance General Insurance.
