Shares of SBFC Finance debuted at a reasonable premium of 44% on exchanges in Wednesday’s trading. Shares are listed at Rs 82 on the NSE against an IPO price of Rs 57 per share. The stock then went on to gain another 11% in intraday trading, bringing its listing-day gain to more than 60%.
Analysts say active investors can hold it for the long term while others may seek profits.
Anubhuti Mishra, Equity Research Analyst at Swastika Investmart, said that SBFC Finance stands out as a rapidly expanding non-banking finance (NBFC) company with strong earnings growth and quality stable assets.
“However, it is vulnerable due to its sensitivity to interest rates and market cycles. So in this market, after listing at such a high price, one should take profits, however, the Active investors can hold it for a long time,” added Mishra.
Driven by strong institutional backlash, SBFC Finance’s initial public offering (IPO) was registered a whopping 70.16x as it ended.
The QIB portion of the IPO was overwhelmingly registered 192 times, followed by non-institutional investors with 49 times and retail investors with nearly 11 times.
The IPO, which includes a new equity issue of up to Rs 600 crore and an offering (OFS) up to Rs 425 crore, is valued in the range of Rs 54-57 per share. At the higher price, analysts value the stock at a P/BVPS of 2.4x with a current book value per share of Rs 23.
Astha Jain of Hem Securities advises investors to take partial profits while holding the remaining shares for the long term.
“The IPO is reasonably priced and the future growth prospects look strong with an all-India presence, good corporate governance backed by major investors,” Jain said.
Proceeds from the new issue of Rs 600 crore will be used to strengthen the capital base to meet future capital requirements.
SBFC Finance is a non-bank, deposit-free finance company that provides loans including secured MSME loans and gold loans.
Key competitive strengths include presence across India, in-house sourcing and comprehensive credit rating, underwriting and risk management framework.
The company has seen spreads widen from 7% in FY21 to 7.7% in FY 2023 despite monetary tightening due to the effective revaluation of loans. as well as an improved rating profile that helps control the cost of capital.
For the year ending March 2023, the company’s revenue was Rs 740 crore. Profit for the period was Rs 149.7 crore.
ICICI Securities, Axis Capital and Kotak Mahindra Capital Company act as the lead bookkeeping managers and KFin Technologies as the offering registration company.
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