Manba Finance IPO

Manba Finance IPO Day 1: GMP, Subscription Status, Review, Good or Bad for Investors?

Manba Finance Limited’s IPO opened on September 23rd, 2024, offering a public issue worth ₹150.84 crore. This IPO has generated significant interest, especially due to its ₹60 grey market premium (GMP) on day 1. As the subscription opened, the retail and Non-Institutional Investor (NII) portions were subscribed at high rates, showing solid demand from the market.

Key Highlights of Manba Finance IPO:

1. IPO Size and Price Band:

1. • The company aims to raise ₹150.84 crore through fresh equity shares.
   • The price band is set between ₹114 and ₹120 per share.

2. Subscription Status (Day 1):

1. • By 11:12 AM on the first day of bidding, the IPO was subscribed 4.78 times overall.
   • Retail investors subscribed 6.80 times, and NII investors subscribed 6.42 times.

3. Grey Market Premium (GMP):

1. • The shares are trading at a ₹60 premium in the grey market.

4. Lot Size:

1. • Investors can apply for the IPO in lots, with each lot consisting of 125 shares.

5. Listing and Allotment Dates:

1. • The IPO allotment is expected to happen on September 26th, 2024, and the listing date is September 30th, 2024 on BSE and NSE.

6. Registrar and Lead Manager:

1. • Link Intime India Private Limited is the official registrar, and Hem Securities Limited is the lead manager.

Manba Finance IPO: Advantages and Disadvantages

Advantages:

1. Promising Growth in NBFC Sector:
   The NBFC sector in India is expected to experience strong growth, especially in the two-wheeler and MSME segments. Manba Finance’s specialization in financing two-wheelers, three-wheelers, and personal loans positions it well to capitalize on this growth.
2. Strong Financial Performance:
   Manba Finance’s assets under management (AUM) have shown substantial growth, from ₹4,958.3 million in FY22 to ₹9,368.6 million in FY24, reflecting a CAGR of 37.5%. Additionally, profit after tax (PAT) increased significantly, and its return on capital employed (RoCE) jumped from 42% to 15.66%.
3. Favorable Market Sentiment:
   The company’s shares are trading at a ₹60 premium in the grey market, indicating positive market sentiment and the potential for listing gains.
4. Diversified Portfolio and Expansion:
   Manba Finance has diversified into personal, business, and used car loans, expanding its dealer network to over 1,100 dealers across six states. This diversification enhances growth prospects.
5. Improved Asset Quality:
   The company has managed to reduce its Net NPA from 30% to 3.16%, which indicates improvement in asset quality and better risk management.

Disadvantages:

1. Highly Competitive Sector:
   The NBFC space is highly competitive, with many well-established players. Smaller NBFCs like Manba Finance face stiff competition from larger, more resourceful companies.
2. High Borrowing Costs:
   The company’s average borrowing cost is 11.98%, which is relatively high. This could pose challenges if borrowing costs increase or if the company cannot maintain its high lending rates (currently above 20%).
3. SME IPO Risks:
   The relatively small size of the IPO may limit the liquidity and scale of the company, potentially increasing volatility for investors.
4. Dependency on Specific Segments:
   Manba Finance’s focus on the two- and three-wheeler segments might limit its growth if the demand in these areas slows down. Diversification into other segments like personal and business loans is still in the early stages.

Conclusion

The Manba Finance IPO presents an attractive investment opportunity, especially for high-risk investors looking for short-term listing gains. The company’s financials, including growth in AUM and reduced NPA, show positive trends. However, the highly competitive nature of the NBFC sector and the company’s reliance on higher borrowing costs pose risks. For long-term investors, the company’s growth in the two-wheeler and MSME finance sectors, combined with its expansion plans, could be promising if managed effectively.

FAQs

1. What is the Manba Finance IPO price band?
   The price band for the IPO is set between ₹114 and ₹120 per equity share.
2. What is the grey market premium (GMP) for Manba Finance IPO?
   The GMP for Manba Finance shares on Day 1 is ₹60.
3. When will the Manba Finance IPO close?
   The IPO will close on September 25th, 2024.
4. What is the size of the Manba Finance IPO?
   The IPO aims to raise ₹150.84 crore through the issue of fresh shares.
5. When will the Manba Finance shares be listed on the stock exchanges?
   The shares are expected to be listed on September 30th, 2024, on both the BSE and NSE.
6. Is it good to invest in Manba Finance IPO for the long term?
   While the company has shown promising financial growth and operates in a booming sector, long-term investors should be mindful of competition in the NBFC space and the risks associated with high borrowing costs.
7. Who is the lead manager for the Manba Finance IPO?
   Hem Securities Limited is the lead manager for the IPO.

Final Thoughts: Good or Bad for Investors?

For short-term investors aiming for listing gains, the positive GMP and strong subscription indicate a favorable market response. For long-term investors, Manba Finance’s financial growth and expansion into new loan segments offer promise. However, potential investors should be cautious of the challenges posed by competition in the NBFC space and rising borrowing costs.

Manba Finance IPO

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