SBFC is a non-deposit taking non-banking finance company in India that offers Secure MSME Loans and Loans against Gold. With a majority of borrowers being entrepreneurs, small business owners, self-employed individuals, salaried, and working class individuals, the company has experienced one of the highest assets under management (AUM) growth at a CAGR of 44% from Fiscal 2019 to Fiscal 2023.
The company focuses on disbursing loans with ticket sizes between ₹ 0.50 million and ₹ 3.00 million, with 87.27% of its AUM having a ticket size within this range. As of March 31, 2023, the average ticket size of Secured MSME Loans, Loans against Gold, and other unsecured loans was ₹ 0.99 million, ₹ 0.09 million, and ₹ 0.69 million, respectively. The company has a diversified pan-India presence, with an expansive footprint in 120 cities across 16 Indian states and two union territories. The company has maintained low levels of AUM concentration per state despite growth over the years, with well-distributed disbursements across zones and reduced concentration risk across industries and sectors. They source customers through a sales team of 1,911 employees and adopt a direct sourcing model through branch-led local marketing efforts, repeat customers, or walk-ins. As of March 31, 2023, approximately 89.49% of Secured MSME Loan collections and 90.92% of unsecured loan collections were non-cash-based EMI collections.
SBFC Finance IPO Details:
|IPO Open Date||Aug 3, 2023|
|IPO Close Date||Aug 7, 2023|
|Listing Date||Aug 16, 2023|
|Face Value||Rs. 10 per share|
|Price||Rs. 54 to Rs. 57 per share|
|Lot Size||260 Shares|
|Issue Size||Rs. 1,025.00 Cr|
|Offer For Sale||Rs. 425 crore|
|Issue Type||Book Built Issue IPO|
|Listing At||BSE, NSE|
|QIB Shares Offered||Not more than 50% of the Offer|
|NII (HNI) Shares Offered||Not less than 15% of the Offer|
|Retail Shares Offered||Not less than 35% of the Offer|
SBFC Finance IPO Objective
IPO is both offer for sale and fresh issue. SBFC Finance will utilise fresh issue proceeds, mainly for augmenting its capital base to meet future capital requirements arising out of the growth of the business and assets, while the offer for sale money will go to selling shareholders.
SBFC Finance Financial Statements:
|Rs. Million||Percentage of Total Income||Rs. Million||Percentage of Total Income||Rs. Million||Percentage of Total Income|
|Revenue from operations|
|Fees and commission income||241.53||4.72%||272.39||5.13%||412.52||5.57%|
|Net gain on fair value changes||91.06||1.78%||157.22||2.96%||119.76||1.62%|
|Net gain on derecognition of financial instruments under amortised cost category||39.68||0.78%||-||-||28.3||0.38%|
|Other operating income||67.06||1.31%||129.44||2.44%||226.02||3.05%|
|Total revenue from operations||5070.99||99.13%||4290.52||9968.00%||7328.12||98.98%|
|Net Loss on derecognition of financial instruments under amortised cost category||106.92||2.01%||4.33%|
|Impairment on financial instruments||336.4||6.58%||360.88||6.80%||320.56||21.63%|
|Employee benefits expense||841.83||16.46%||1095.34||2064.00%||1601.23||1.72%|
|Depreciation and amortisation expense||95.4||1.84%||117.81||2.22%||127.14||7.79%|
|Profit before tax||1140.65||22.30%||866.96||16..34%||2013.66||27.19%|
|Profit after tax||850.1||16.62%||645.21||12.16%||1497.36||20.22%|
|Particular||As of / For the Year ended March 31|
|AUM (₹ million)||22213||31921||49428|
|Net Worth (₹ million)||12051||12871||17272|
|Tangible Net Worth (₹ million) (4)||9447.16||10267.75||14668.76|
|Leverage (AUM/ Net worth||1.84||2.48||2.86|
|AUM/ Tangible Net Worth||2.35||3.11||3.37|
|Restated Profit After Tax for the Year / Period (₹ million)||850.1||645.21||1497.36|
|Return on Tangible Equity||10.02%||6.55%||12.01%|
|AUM per Branch||179.14||236.46||325.19|
|AUM per Employee||15.10||15.59||17.52|
|Disbursement (Secured MSME Loans) per branch per month (₹ million||4||8.23||12.48|
|Disbursement (Secured MSME Loans) per employee per month (₹ million)(13)||0.66||0.89||1.07|
|Gross NPA ratio (%)||3.16%||2.74%||2.43%|
|Net NPA ratio (%)||1.95%||1.63%||1.41%|
|Operating Expenses to Average AUM (%)||6.59%||6.59%||5.70%|
|Average cost of borrowing (%)||8.11%||7.65%||8.22%|
|Cost to income ratio (%)||46.34%||57.19%||49.82%|
|Provision Coverage Ratio (%||38.25%||40.44%||42.04%|
|Average yield on Gross Loan Book (%||15.09%||14.89%||15.91%|
|Net Interest Margin (%||11.73%||9.39%||9.32%|
Clermont Group-owned firms SBFC Holdings Pte Ltd and Clermont Financial Pte Ltd, and Arpwood Group-owned Arpwood Capital and Arpwood Partners Investment Advisors LLP are the corporate promoters of the company, together holding 80.48 percent shares.
SBFC Finance Management
Neeraj Swaroop - Independent Director and Chairperson
Aseem Dhru - Managing Director and Chief Executive Officer.
Narayan Barasia - Chief Financial Officer
Jay Mistry - Company Secretary and Compliance Officer.
Risk of non-payment or default
As of March 31, 2023, 81.33% of the total AUM of Secured MSME Loan customers are self-employed. Between April 1, 2021 and March 31, 2023, 80.14% of the loans disbursed were to self-employed customers, amounting to ₹ 42,051.68 million. A significant portion of the loan portfolio is relatively new and was disbursed during the last 36 months.
The company has a high risk of non-payment or default for customers with annual income below ₹ 0.30 million (monthly income below ₹ 25,000) in the corresponding periods. The figures below are the GNPAs for this segment:
|Particulars||As of March 31|
|Average LTV on AUM on Origination Basis for Secured MSME Loans (%||45.17%||43.42%||42.51%|
|Average LTV on AUM on Origination Basis for Loan against Gold (%)||67.88%||69.49%||48.51%|
As of March 31, 2023, 69.98% of AUM is from six states. While branches are spread across 16 states and two union territories in India (with no state contributing more than 17.42% AUM as of March 31, 2023), the concentration in these states exposes us to any adverse geological, ecological, economic and/or political circumstances in those respective regions.
Non-performing assets (NPA)
Higher levels of NPA may impact the quality of the company's portfolio and could adversely affect its business if it fails to adequately provide for these NPAs. As of end of FY23, the GNPA, NNPA and provision coverage ratio stood at 2.43%, 1.41% and 42.04%, respectively.
Rating downgrade may lead to rise in borrowing costs, which lead to difficulty in financing access, and adversely impact the business.
How to Apply for SBFC FINANCE IPO?
If you have a trading and demat account with Moneysukh you can easily apply for the SBFC FINANCE IPO. You have to visit the Moneysukh website and just need to follow the steps given below. However, if you don't have a trading account and demat account, you can apply for the same to open with Moneysukh and then follow the steps mentioned below.
Steps to Apply for SBFC FINANCE IPO:
Step 1: Keep watching when SBFC FINANCE IPO opens for online bidding.
Step 2:When IPO opens, just visit trade.moneysukh.com and log in with your User ID & password.
Step 3:Now you have to find the IPO section and select the SBFC FINANCE IPO.
Step 4:Here you have to fill in the various details like price, quantity, and so on.
Note: At the time applying in any IPO, always bid at the cutoff price before submitting your application.
Step 5:Now make the payment and submit your IPO application successfully.
How to Check SBFC FINANCE IPO Allotment Status?
Once the bidding for the SBFC FINANCE IPO closed, and the date for allotment is arrived, you can check the allotment status on your phone or desktop PC. You can check the IPO allotment status directly through the stock exchanges' websites like NSE or BSE. And if you applied through Moneysukh you check from here also using your PAN card and IPO details.
If you have been allotted any share, the money for the value of the same will be deducted from your account, however, if IPO is over subscribed many times, there is less chances of getting shares allotment in IPOs. And you are also not lucky enough to get the allotment, then your money will be refunded before the listing date in your bank account. If you have been allotted the shares you can enjoy the listing gains by selling the shares in the secondary market.
Also Read: Golden Rules of investing in Stock Market