SBFC-Finance- Limited-ipo-elite-wealth

SBFC Finance Limited IPO Company Profile :

SBFC Finance Limited is a systematically important, non-deposit taking non-banking finance company (“NBFC-ND-SI”) offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working-class individuals. Among MSME-focused NBFCs in India, SBFC Finance Limited has one of the highest assets under management (“AUM”) growth, at a CAGR of 40% in the period from Fiscal 2019 to Fiscal 2022. The company has also witnessed robust disbursement growth, at a CAGR of 39% between Fiscal 2019 and Fiscal 2022.

SBFC Finance Limited has a diversified pan-India presence, with an extensive network in the target customer segment. As of June 30, 2022, the company had an expansive footprint in 104 cities, spanning 16 Indian states and two union territories, with 135 branches. The geographically diverse distribution network, spread across the North, South, East, and West zones, allows the company to penetrate underbanked populations in tier II and tier III cities in India.

SBFC Finance Limited has set up stringent credit quality checks and customized operating procedures that exist at each stage for comprehensive risk management. The company primarily focuses on small enterprise borrowers, whose monthly income is up to ₹ 0.15 million, with a demonstrable track record of servicing loans such as gold loans, loans for two-wheeler vehicles and have a CIBIL score above 700 at the time of origination.

 


    Open Demat & Trading Account Now!


    SBFC Finance Limited IPO Details:

    IPO Open Date Not Disclosed
    IPO Close Date Not Disclosed
    Listing Date Not Disclosed
    Face Value ₹10 per share
    Price Not Disclosed
    Lot Size Not Disclosed
    Issue Size [.] shares
    (aggregating up to ₹1,600 Cr)
    Fresh Issue [.] shares
    (aggregating up to ₹750 Cr)
    Offer for Sale [.] shares

    (aggregating up to ₹850 Cr)

    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
    Company’s promoters SBFC Holdings Pte. Ltd., Clermont Financial Pte. Ltd., Arpwood Partners Investment Advisors LLP, Arpwood Capital Private Limited, And Eight45 Services LLP

    SBFC Finance Limited IPO Financial Analysis:

    Particulars Q1 FY-23(in cr.) FY-22(in cr.) FY-21(in cr.) FY-20(in cr.) CAGR
    Customers 80073 72816 56587 40432 25.6%
    AUM 3628.26 3192.18 2221.32 1648.21 30.1%
    Net Worth 1571.88 1287.17 1205.11 1012.48 15.8%
    PAT 32.07 64.52 85.01 35.49 39.6%
    ROE (%) 2.24% 5.18% 7.67% 3.75%  
    Branches 135 135 124 96 12.0%
    Gross NPA ratio (%) 2.68% 2.74% 3.16% 2.28%  
    Net NPA ratio (%) 1.57% 1.63% 1.95% 1.58%  
    Average cost of borrowing (%) 2.06% 7.65% 8.11% 12.39%  
    Provision Coverage Ratio (%) 41.54% 40.44% 38.25% 30.80%  
    Average yield on Gross Loan Book (%) 15.49% 14.89% 15.09% 15.78%  
    Net Interest Margin (%) 9.40% 9.39% 11.73% 11.69%  

    Pre-Offer shareholding of the Selling Shareholders:

    S. No. Name of the Selling Shareholder No. of Equity Shares

    held

    Percentage of the pre-Offer paid

    Up equity share capital (%)

    1. SBFC Holdings Pte. Ltd. 657,040,000 73.25%
    2. Arpwood Partners Investment Advisors LLP 122,217,177 13.62%
    3. Arpwood Capital Private Limited 29,995,300 3.34%
    4. Eight45 Services LLP 24,272,805 2.71%
    Total   833,525,282 92.92%

    SBFC Finance Limited IPO Offer for Sale Details:

    S. No. Name of the Selling Shareholder Maximum amount of Offered Shares( in ₹ crores)
    1. SBFC Holdings Pte. Ltd. Up to 275.00
    2. Arpwood Partners Investment Advisors LLP Up to 398.19
    3. Arpwood Capital Private Limited Up to 97.73
    4. Eight45 Services LLP Up to 79.08

    SBFC Finance Limited IPO Strengths:

    • SBFC Finance Limited has an expansive footprint in 104 cities, spanning 16 Indian states and two union territories, with 135 branches. This extent of the network allows the company to service its existing customers and attract new customers as a result of personal relationships cultivated through proximity and frequent interaction by the employees. This allows the company to expand its presence across the country more seamlessly than regional players

    • Most small businesses in India do not maintain documents such as income proof, business registration, GST registration, income tax filings, and bank statements, which makes access to credit challenging. SBFC Finance Limited believes that its understanding of the local characteristics of these markets and customers has allowed it to address the needs of low and middle-income customers and assisted it to penetrate deeper into such markets.

    • To ensure positive business outcomes, 100% of the loan portfolio has in-house origination, limiting the company’s reliance on direct selling agents or connectors in order to ensure a more direct, thorough understanding of the customer’s profile.

    • The company sources customers directly through our sales team of 1,594 personnel as of June 30, 2022, and has adopted a direct sourcing model through branch-led local marketing efforts, repeat customers, or walk-ins, which has helped the company maintain contact with its customers and establish strong relationships with them, high levels of customer satisfaction and increased loyalty. The AUM per employee has also increased from ₹ 14.29 million as of March 31, 2020, to ₹ 15.10 million as of March 31, 2021, to ₹ 15.59 million as of March 31, 2022, and was ₹ 15.26 million as of June 30, 2022.

    • SBFC Finance Limited’s risk management committee has developed risk management policies, addressing credit risk, market risk, liquidity risks, and operational risks. Leveraging significant operational experience, the company has set up stringent credit quality checks and customized operating procedures that exist at each stage for comprehensive risk management. The company’s focus is on the profile of the borrower, and as of June 30, 2022, 80.43% of the Secured MSME Loan customers have a CIBIL score above 700 at the time of origination, while 7.59% of the customers are new to the formal secured lending ecosystem.

    • Average yield on Gross Loan Book was 15.49%, with Secured MSME Loans and Loans against Gold accounting for 15.05% and 16.48%, respectively. The loan against Gold portfolio has grown from 25,862 customers as of March 31, 2020 to 42,931 customers, as of March 31, 2022 at a CAGR of 28.84%. The AUM has grown from ₹ 16,482.07 million as of March 31, 2020, to ₹ 31,921.81 million as of March 31, 2022 and was ₹ 36,282.62 million as of June 30, 2022, at a CAGR of 39.17% between Fiscal 2020 and Fiscal 2022

     

    SBFC Finance Limited IPO Risk factors:

    • SBFC Finance Limited’s business is particularly vulnerable to interest rate risk, and volatility in interest rates for both lending and treasury operations could have an adverse effect on the net interest income and net interest margin, thereby affecting the results of operations and cash flows.

    • SBFC Finance Limited competes with Five-Star Business Finance Limited, Veritas Finance Private Limited, IIFL Finance, and Fedbank Financial Services Limited in the Secured MSME Loans segment, and Muthoot Finance, Manappuram Finance, IIFL Finance, Fedbank Financial Services Limited, and Shriram City Union Finance in the Loan against Gold segment. Many of these competitors may have greater financial resources, may be larger in terms of business volume, and may have significantly lower cost of funds compared to SBFC Finance Limited. Many of them may also have greater geographical reach, and long-standing partnerships and may offer their customers other forms of financing that SBFC Finance Limited may not be able to provide.

    • Some of the loans that the company provides are unsecured and are susceptible to certain operational and credit risks which may result in increased levels of NPAs, which may adversely affect the business, prospects, results of operations, and financial condition of the company.

    SBFC Finance Limited IPO Registrar to the offer:

    KFin Technologies Limited

    Contact Person: M. Muralikrishna

    Tel: +91 40 6716 2222 / 7961 1000

    Email: Sbfc.ipo@kfintech.com

     

    SBFC Finance Limited IPO FAQ

    Ans.SBFC Finance Limited IPO will comprise fresh share issue and new offer share issue. The company aims to go public to accelerate its growth and expansion plan.

    Ans. The SBFC Finance Limited IPO opens on <>.

    Ans. The minimum lot size that investors can subscribe to is <> shares.

    Ans. The SBFC Finance Limited IPO listing date is not yet announced.

    Ans. The minimum lot size for this upcoming IPO is <> shares.