SBFC Finance Ltd is all set to offer a remarkable growth opportunity for investors as its Initial Public Offering (IPO) opens for subscription on Thursday, August 3. As a specialized financial institution, SBFC Finance is dedicated to providing loans to entrepreneurs, self-employed individuals, small business owners, and salaried professionals. With a solid financial performance, extensive customer base, and a strong market presence, SBFC Finance is poised for a successful IPO.

Key Financial Highlights

During the nine months ending in December, SBFC Finance generated sales of ₹525, recording a profit of ₹107. The company’s impressive performance is backed by its 137 branches, spread across 105 locations, and a substantial customer base of 94,997 as of December 2022, up from 40,432 in FY20.

IPO Details and Price Band

SBFC Finance IPO’s floor price stands at 5.4 times the face value of the equity share, while the cap price is 5.7 times the face value. The price-to-earning (P/E) ratio for fiscal 2023, based on diluted EPS at the floor price, is 33.33 times, and at the cap price, it is 35.19 times.

In March, SBFC Finance refiled its IPO papers with the Securities and Exchange Board of India (SEBI), reducing the IPO size to ₹1,200 crore from ₹1,600 crore. The IPO consists of fresh issuance of equity shares worth ₹600 crore and an offer for sale (OFS) of ₹425 crore, making the total offer size ₹1,025 crore.

Important Dates and Allotment

SBFC Finance IPO opens for subscription on Thursday, August 3, and closes on Monday, August 7. The allocation to anchor investors is scheduled for Tuesday, August 2. The basis of allotment of shares will be finalized on Thursday, August 10, with the company initiating refunds on Friday, August 11. The shares will be credited to the demat accounts of allottees on Monday, August 14. SBFC Finance IPO shares are likely to be listed on both BSE and NSE on Wednesday, August 16.

IPO Book Running Lead Managers and Registrar

The book-running lead managers (BRLM) for the SBFC IPO offer are ICICI Securities, Axis Capital, and Kotak Mahindra Capital Company. KFin Technologies serves as the registrar for the IPO.

Grey Market Premium and Estimated Listing Price

SBFC Finance IPO GMP or grey market premium stands at +40, indicating that SBFC Finance shares are trading at a premium of ₹40 in the grey market. Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of SBFC Finance shares is ₹97 apiece, which is 70.18% higher than the IPO price.

Risks and Mitigation

SBFC Finance has emphasized some potential risks in its Red Herring Prospectus (RHP). One of the main risks pertains to non-payment or default by borrowers, which could adversely impact the company’s operations and financial situation. The reliance on data supplied by clients and outside service providers also poses a risk, as inaccurate or incomplete information could affect creditworthiness evaluation and collateral assessment.

Conclusion

SBFC Finance Ltd’s IPO presents a lucrative opportunity for investors to participate in the growth of a well-established financial institution. With a proven track record, an expanding customer base, and strong market positioning, SBFC Finance is well positioned for success in the market.