SBFC Finance IPO to open on Aug 3 - Price band at ₹54-57; check out details

• The lot size for the IPO is at a minimum of 260 shares and in multiples of 260 shares thereafter.
• The issue comprises fresh of ₹600 crore and an offer for sale of ₹425 crore.
• The company primarily caters to customers in tier II and tier III cities.
  

SBFC Finance’s ₹1,025 crore initial public offer (IPO) is all set to open on August 3 and close on August 7. The price band for the issue has been fixed at ₹54-57 per share.

Investors can bid for a minimum of 260 shares and in multiples thereafter. The issue of face value of ₹10 per equity share comprises fresh issuance of equity shares worth ₹600 crore and an offer for sale of ₹425 crore.

The floor price is 5.4 times the face value of the equity share and the cap price is 5.7 times the face value of the share, the company said.

The company is a non-deposit-taking non-banking finance company (NBFC) offering secured MSME loans, and loans against gold. A majority of its borrowers are entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals.

The company primarily caters to customers in tier II and tier III cities, and focuses on serving customers who have a strong credit history but may lack formal proof of income documents.

It has a footprint in 120 cities across 16 Indian states and two union territories, operating through a network of 152 branches.

ICICI Securities Limited, Axis Capital, and Kotak Mahindra Capital Company are the book running lead managers to the Offer. KFin Technologies is the registrar to the offer. The shares are proposed to be listed on BSE and NSE.

Financials & risk factors

The company’s consolidated revenues and net profit has grown consistently in the last few years, while its gross NPA ratio has been going down.

Source: DRHP & press release

The NBFC is subject to periodic inspections by the Reserve Bank of India (RBI) and non-compliance with its observations can expose it to penalties and restrictions.

“We are subject to laws and regulations governing the financial services industry and our operations in India, including laws in relation to capital adequacy ratios. Changes in regulations governing us could adversely affect our business, results of operations and prospects,” the company said in its risk factors.

Its non-convertible debentures are listed on the BSE, and there have been instances of non-compliances in the past with rules and regulations. “If we fail to comply with such rules and regulations, we may be subject to certain penal actions, which may have an adverse effect on our business, results of operations, financial condition and cash flows,” it adds.

It also lists business risks like non-payment or default by our borrowers may adversely affect our business, results of operations and financial condition.

The quality of its portfolio may be impacted due to large non-performing assets (NPAs) as its business can be adversely affected if they are unable to provide it.