Manba Finance IPO: A Detailed Overview
Both the mainline IPOs of the next week are making you happy and sad at the same time. Today, we are going to discuss the IPO of Manba Finance.
IPO Price and Expectations
Let me tell you right at the start, the IPO price is ₹10. According to sources, the grey market premium is running on the edge today. A raffle of ₹660 is expected if you get an allotment of one lot in the retail category. A profit of ₹5,500 is expected in retail, and ₹75,000 profit in the other category. You must have already gotten excited after hearing this, but at the same time, remember that the size of this IPO is very small—only ₹150 crores.
Small IPO, Big Opportunities
Since this is a small IPO, it is compulsory to apply in multiple names. You will find all the relevant details in the description. Account opening links will also be available, and we will discuss them in detail.
Company Background
The company was incorporated in 1998. Manba Finance is an NBFC (Non-Banking Financial Company) that provides financial solutions. It offers loans mainly for two-wheelers, three-wheelers, and various small or used cars. In addition to vehicle loans, they provide personal loans as well.
IPO Timelines and Listing Dates
The IPO will open between the 23rd to 25th of September. Whether you receive your money or shares will be confirmed by the 26th of September, and the listing date is expected to be the 30th of September. A retail lot of 125 shares will cost around ₹15,000.
Application Strategy for AI Small and AI Big Categories
For the AI Small category, you will need to apply for a minimum of 14 lots, while for the AI Big category, you’ll need to apply for 67 lots. Applying for the lowest amount in any category does not make much sense. For example, if you’re applying in retail, you should only apply for one lot of 125 shares i.e. ₹15,000. Instead of thinking about applying for two or three lots, the chances of allotment will not increase, because this IPO is going to be heavily oversubscribed.
IPO Pricing and Lead Manager
The entire fresh issue is priced in the ₹114 to ₹120 price band. In the retail and AAI categories, the cut-off price of ₹120 will apply. The lead manager for this IPO is Hem Securities, a leader in the SME sector.
Financial Performance and Risks
Talking about financials, total assets have roughly doubled in the last two years. Revenue has also nearly doubled, showing a growth rate of 44% from 2023 to 2024. The profit after tax has increased from ₹16 crore to ₹30 crore, with a growth rate of 90% from 2023 to 2024. The return on equity remains strong at 21.3%. Earnings per share (EPS) stands at ₹6.25, and the P/E ratio is around 19.
P/E Comparison
In comparison to peers, Bajaj Finserv’s P/E ratio is 13, Arman Financial Services’ P/E ratio is 9, and MAS Financial Services’ P/E ratio is 18. The company aims to achieve the right valuation while balancing risks and rewards.
Risks to Consider
One major risk involves the company’s relationship with its dealers, who contribute significantly to their business. Their new vehicle loan EMI stands at ₹97.9, meaning they are largely dependent on new business. Diversification is limited, with the majority of loans focusing on two-wheeler vehicles. Additionally, the company’s BBB+ rating is maintained, but any change in this rating could have significant negative impacts.
An asset-liability mismatch is another concern. It’s crucial to manage the balance between loans taken and loans given, as mismanagement could reduce profitability. Lastly, frequent strikes and increased remuneration rates could impact the company’s performance.
Final Thoughts
If we try to conclude this IPO review, this is one IPO for which I am personally excited, mainly from a listing gain perspective. I am particularly focused on the anchor book. While the chances of allotment may be slim, overall, the IPO looks promising. I am giving it a thumbs up.
What are your thoughts? Do let me know by commenting! And remember, always consult your financial advisor before making any investment decisions.
Happy Learning and I will see you very soon! If you’re interested in mutual fund investments, the links will be found in the description.