Belstar Microfinance – About the Company
Belstar Microfinance, established in 1988 and acquired by Dr. Kalpanaa Sankar in 2008, is India's ninth-largest NBFC-Micro Finance Institution in India. The company aims to be a socially responsible microfinance institution, driving financial inclusion by promoting entrepreneurship and economic empowerment of women in rural and semi-urban regions. The company offers a variety of loan products, including micro enterprise, small enterprise, consumer goods, festival, education, and emergency loans. The company's lending model, the "self help group" (SHG) model, represents 56.94% of its gross loan portfolio as of December 31, 2023.
With 1,009 branches, the company serves approx. 2.67 million customers across 279 districts in 19 states and union territories. The company is supported by Muthoot Finance Limited and private equity investors Maj Invest and Affirma Capital.
Belstar Microfinance IPO Objectives
Belstar Microfinance IPO issue comprises of fresh issue and an offer for sale.
- The offer for sale by existing shareholder comprises of up to Rs. 300 crores.
- Through the fresh issue, the company wants to boost its capital base to meet future capital requirements towards onward lending.
| As at December 31, 2023 | FY23 | FY22 | FY21 | |
| CRAR (%) | 18.65% | 21.97% | 24.06% | 22.24% |
| Tier I Capital base (%) | 15.43% | 20.30% | 20.96% | 16.64% |
Belstar Microfinance IPO Details:
| IPO Open Date | Not Available |
| IPO Close Date | Not Available |
| Basis of Allotment | Not Available |
| Listing Date | Not Available |
| Face Value | Rs 10 per share |
| Price | Not Available |
| Lot Size | Not Available |
| Total Issue Size | Up to [●] Equity Shares |
| Aggregating up to ₹ 13,000 million | |
| Fresh Issue | Up to [●] Equity Shares |
| Aggregating up to ₹ 10,000 million | |
| Offer For Sale | Up to [●] Equity Shares |
| Aggregating up to ₹ 3,000 million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not less than 75% of the Net Issue |
| Retail Shares Offered | Not less than 10% of the Net Issue |
| NII (HNI) Shares Offered | Not more than 15% of the Net Issue |
Belstar Microfinance IPO Issue Price & Size
Belstar Microfinance IPO issue price is not yet known as the issue date and other details not declared by the company. As of DRHP, only the total issue size is available, which is Rs. 1300 crores. Rs 1300 crores Issue comprises of fresh issue of Rs. 1000 crores and offer for sale of Rs. 300 crores.
Belstar Microfinance IPO Launch Date
As of date, only the DRHP has been filed with the SEBI, so no tentative dates has been officially announced by the company through RHP. Once the company files the RHP document, all the necessary dates and price band will be updated.
Belstar Microfinance Financial Statements:
| Particulars | For period ended
Dec 31, 2023 |
FY23 | FY22 | FY21 |
| Revenue from operations | ||||
| Interest income | 11592.33 | 8817.73 | 676.32 | 5229.37 |
| Fee and commission income | 2.81 | 64.29 | 37.37 | 28.15 |
| Net gain on fair value change | 36.74 | 27.47 | 7.87 | 13.84 |
| Net gain on de-recognition of financial instruments
under amortised cost category |
1199.52 | 1403.12 | 458.73 | 242.68 |
| Total Revenue from operations | 12831.4 | 10312.61 | 7272.29 | 5514.04 |
| Other Income | 120.74 | 66.54 | 12.02 | 15.37 |
| Total Income | 12952.14 | 10379.15 | 7284.31 | 5529.41 |
| Expenses | ||||
| Finance cost | 4080.62 | 3654.44 | 2912.21 | 2342.37 |
| Fee and commission expense | 234.71 | 263.79 | 196.68 | 129.03 |
| Net loss on fair value changes | 252.96 | 193.06 | - | - |
| Impairment of financial instrument | 2150.07 | 1445.79 | 1497.5 | 807.55 |
| Employee benefit expenses | 2258.76 | 2155.78 | 1529.53 | 1190.96 |
| Depreciation, amortization and impairment | 93.76 | 118.39 | 86.39 | 92.55 |
| Other expenses | 807.8 | 854.83 | 500.54 | 396.83 |
| Total Expenses | 9878.77 | 8686.08 | 6722.85 | 4959.29 |
| Profit/(loss) for the period | 3073.37 | 1693.07 | 561.46 | 570.12 |
| Basic | 48.14 | 27.12 | 12.01 | 12.43 |
| Diluted | 48.14 | 27.12 | 12.01 | 12.43 |
| Particulars | For period ended Dec 31, 2023 | FY23 | FY22 | FY21 |
| Number of Active Borrowers | 2669009 | 2129884 | 1702836 | 1382533 |
| Disbursements | 67759.36 | 57950.85 | 35463.86 | 24350.27 |
| Disbursements Growth (%) | 85.08% | 63.41% | 45.64% | -6.82% |
| Average Ticket Size on
Disbursements (in Rs INR) |
52370 | 43051 | 35025 | 34430 |
| Total Borrowings (in ₹ million) | 64241.81 | 48264.86 | 35570.36 | 27956.36 |
| Yield on Advances (%) | 19.24% | 20.85% | 20.84% | 20.79% |
| Cost of Borrowing | 7.20% | 8.72% | 9.17% | 9.99% |
| NIM (%) | 12.03% | 11.47% | 11.08% | 10.87% |
| Cost to Income (%) | 38.27% | 50.45% | 52.91% | 56.77% |
| Return on average gross
outstanding loan portfolio (%) |
3.13% | 2.47% | 1.18% | 1.57% |
| Gross NPA (%) | 1.88% | 2.42% | 5.68% | 2.72% |
| Provision Coverage Ratio (%) | 91.49% | 72.73% | 73.93% | 78.29% |
| Net NPA (%) | 0.16% | 0.66% | 1.48% | 0.59% |
| Number of branches | 1009 | 767 | 632 | 560 |
Belstar Microfinance IPO Promoters & Shareholding of the Company
There are three prompter of Belstar Microfinance;
- Muthoot Finance Limited
- Sarvam Financial Inclusion Trust
- Kalpanaa Sankar
The promoters in total hold 73.30% stake in company, as of the date of filing DRHP.
Why Invest in Belstar Microfinance IPO?
While investing in an IPO-bound company, one should check their strength and weaknesses that help an investor to visions company’s prospects. Fundamental analysis apart from financial and competitive strength, also help you to know the risk factors that can affect the business operations and future prospects of the company. After evaluating the variables such strength weakness, financials, you may strike a balance and decide to invest or not invest in an IPO.
Strength
Pan-India presence
The company serves 2.67 million active customers across 279 districts and 1,009 branches in 19 states. The company has diversified its loan portfolio by geography and by type of activities connected to the loans.
The institution continuously aims to reduce state concentration risk through expansion into new states and widening its reach into untapped markets.
The top three states in terms of total gross loan portfolio are Tamil Nadu, Karnataka, and Madhya Pradesh, representing 48.46%, 9.02%, and 5.62% of the total gross loan portfolio as of December 31, 2023.
The top three activities connected to the loans provided are agriculture and agriculture-allied, services, and trade and business, representing 59.75%, 22.75%, and 11.76% of the gross loan portfolio as of March 31, 2021, and 66.09%, 16.23%, and 11.78% of the gross loan portfolio as of December 31, 2023.
Professional and experienced leadership
Belstar Microfinance is run by professional management, and after associating with Muthoot group, the company continues to receive managerial and financial synergies from Muthoot group and private equity investors like Maj Invest and Affirma Capital. Muthoot Finance. Belstar is a strategic investment for Muthoot Group and at time of filing prospectus, the group holds 66.13 percent stake in company.
Robust credit assessment process
The company has implemented robust policies addressing various risks, including credit, liquidity, market, concentration, information security, operational, and political risks.
Customer due diligence procedures include multiple levels of checks and controls, including evaluation of repayment capacity and group training sessions. Credit bureau data is used to verify customer details and obtain information on past credit behavior. Portfolio risk levels are periodically evaluated and monitored to minimize bad debt incidence.
The company's robust credit assessment process and risk management framework have resulted in a decrease in gross non-performing assets (NPA) from 2.72% in 2021 to 2.42% in 2023, and a stable net non-performing assets (NPA) from 0.59% to 0.66% in 2023.
Weakness
Asset quality
BML primarily operates in rural and semi-urban areas, serving customers engaged in agriculture and related activities. The customers are predominantly rural women borrowers who have limited sources of income, savings, and credit histories, making it difficult to consistently carry out credit risk analyses.
Even though their loans are secured against hypothecation, the hypothecated assets contain borrowers' stock, receivables, and other current assets, which fall into the higher-risk category. The gross non-performing asset (GNPA) has fallen to 1.88% as of Dec 31, 2023 from 2.42 as of FY23.
Loan maturity
As per the draft, approx. 98.00% of loan issued by the company will due within two years of disbursement. This can have both negative and positive effects. Positive in a case, the loan has less chances of getting default as the lender is in close contact with the borrower. Short maturity can have negative affect as the company could not yield higher interest income from longer.
Geographical concentration
The company generates significant portion of its gross loan portfolio from Tamil Nadu, where most of its branches are located.
As can be seen from table below, majority of company’s active borrower base, disbursement amount and branches come from Tamil Nadu. If we add up, Karnataka and Kerala, we will cross the half way mark across given particulars.
The company may face negative consequences from the front of business prospective, financially, operationality, if the state undergoes negative developments or any sort of slowdowns.
| As of December 31, 2023 | ||||
| Loans Originating from | Branches | Disbursements | Active Borrowers | |
| South India (including Tamil Nadu, Karnataka and Kerala) | 63.94% | 54.31% | 64.19% | 59.13% |
| Tamil Nadu | 48.56% | 36.47% | 48.18% | 44.14% |
| Rest of India (i.e. outside South India) | 36.06% | 45.69% | 35.81% | 40.87% |
Belstar Microfinance Limited IPO Grey Market Premium (GMP)
GMP is the premium price paid over the IPO issue price. This premium is seen from speculator or trader view, that they are ready to pay in the grey market. GMP is an unofficial ecosystem that is determined in the grey market and keeps fluctuating as per the demand and supply of the shares in the primary market. However, GMP only should be not considered as a reliable factor to determine the listing price of an IPO-bounded company, as there are various factors that affect the stock market and individual stocks.
Also Read: What are the Top Factors Affecting the Stock Market in India
The DRHP has only been filled with the SEBI and no further news on issue launch date is present in market. As and when the RHP is filed and date of IPO comes near, grey market premium price discovery will be made available through online sources.
How to Apply for BELSTAR MICROFINANCE IPO?
To apply in BELSTAR MICROFINANCE IPO you need to open demat account to hold your allotted shares and a trading account to sell or buy the shares into the secondary market. And not only applying in the IPO, but while buying or selling the shares in the stock market you also need both these types of accounts. Hence, you can apply here at Moneysukh to open a trading and demat account at the lowest brokerage.
Also Read: Features of Best Demat Account with Lowest Brokerage Charges in India
Having both these accounts at Moneysukh, you will get the advantages of the best online trading apps to trade or invest in equities, commodities and currencies. Here you will get the flexibility to choose the best trading platform and advanced trading software like Keev,TradeTron, Quantman, AlgoBulls,Trade Radar, and FoxTrader all integrated with TradingView to facilitate the best trading experience.
Also Read: Equity or Commodity which is better for Trading or more Profitable
Moreover, you can also start algo-trading – a high-frequency trading mechanism to choose the best algo-trading platforms and trade with best intraday algo-trading strategy at the lowest brokerage pricing. At Moneysukh you can also get stock recommendations and tips backed with research reports and useful tutorials on the stock market to help the clients understand the stock market in a better way. However, right now to apply for the BELSTAR MICROFINANCE IPO you can follow the steps given below.
Steps to Apply for BELSTAR MICROFINANCE IPO:
Step 1: When BELSTAR MICROFINANCE IPO opens you can bid online.
Step 2: Just go to trade.moneysukh.com and log in with your User ID & password.
Step 3: Now look for the IPO section and click on the BELSTAR MICROFINANCE IPO.
Step 4: Here you need to fill in the required details like price, quantity, and so on.
Note: At the time of applying for the IPO, make sure to bid at the cutoff price and then submit your application.
Step 5: Now make the required payment and then submit your IPO application successfully.
How to Check BELSTAR MICROFINANCE IPO Allotment Status?
Checking the allotment status online is very easy if you have the PAN details and IPO application number. But checking the details of the IPO allotment is possible only when the basis of allotment is arrived. In the case of BELSTAR MICROFINANCE IPO, you can also check the allotment status through various online sources.
Also Read: How to check IPO allotment status on NSE, BSE through Moneysukh
And the basis of the allotment is highly dependent on the oversubscription of the IPO. If the IPO is oversubscribed by many folds, then for the investors who applied through the retail category or HNI category, the chances of getting the allotment become very low. Here while applying to such over-demanding IPOs you can follow some tips to improve your chances of getting the allotment in IPO.
Also Read: How to Increase the Chances of IPO Allotment
And when due to oversubscription of IPOs, you don’t get any allotment of shares, then your money will be refunded back into your bank account or fun will be unblocked if you applied through ASBA. However, despite the oversubscribed IPO, if get the allotment then the allocated shares will be transferred into your demat account any time before the date of listing. That you can sell in the secondary market after listing or keep from the long-term investment point of view.
