Manba Finance, a non-banking financial company (NBFC), is all set to launch its Initial Public Offering (IPO) from Monday, September 23, to Wednesday, September 25. The Manba Finance IPO aims to raise ₹150.84 crore and offers 1,25,70,000 equity shares. Investors can bid for shares priced between ₹114 and ₹120, with a minimum application size of 125 shares and multiples thereafter. This IPO marks a significant step in Manba Finance’s growth trajectory, as the funds from the Manba Finance IPO will be used to enhance its capital base and fuel future expansion.
Established in 1998, Manba Finance has a strong presence in vehicle financing, offering loans for new two-wheelers (2Ws), three-wheelers (3Ws), electric vehicles (EVs), used cars, small business loans, and personal loans. Over the years, it has catered to a diverse customer base, including both salaried individuals and self-employed professionals. The company typically finances up to 85% of a vehicle’s purchase price, while customers cover the remaining 15%.
Manba Finance IPO: Key Details and Strategy
Manba Finance has already raised ₹45.25 crore from eight institutional investors, including prominent names such as Chartered Finance & Leasing, Finavenue Capital Trust, and Antara India Evergreen Fund. These investors received 37.71 lakh shares at ₹120 per share in a pre-IPO allocation. The firm aims to use the proceeds from the IPO to strengthen its capital base, meet future capital requirements, and expand its offerings.
Operating through a wide network of over 1,100 dealers, Manba Finance primarily serves urban, semi-urban, and rural areas. Notably, it has partnered with more than 190 electric vehicle (EV) dealers across states like Maharashtra, Gujarat, Rajasthan, Chhattisgarh, Madhya Pradesh, and Uttar Pradesh. This focus on EV financing positions Manba Finance to tap into the growing demand for environmentally friendly vehicles, particularly in a market where EV adoption is steadily rising.
Manba Finance IPO also benefits from the company’s strategic expansion plans, which aim to reach new geographical markets and strengthen relationships with vehicle dealers. This includes both conventional and electric vehicle dealers, further diversifying its loan portfolio and improving its market position. As part of its growth strategy, the company plans to introduce additional loan products, such as used car loans, small business loans, and personal loans, enhancing its competitive edge in the NBFC sector.
Financial Performance and Growth Prospects
For the fiscal year 2024, Manba Finance reported a revenue of ₹191.63 crore, with a net profit of ₹31.42 crore. This marks a significant improvement compared to its financial performance in the fiscal year ending March 2023, where it posted a revenue of ₹133.32 crore and a net profit of ₹16.58 crore. The company’s assets under management (AUM) have grown at a compound annual growth rate (CAGR) of 37.5% over FY22-24, reflecting strong performance in a competitive market. Manba Finance’s ability to grow its loan book and improve profitability, despite challenges in the post-COVID economy, is a testament to its resilience and operational efficiency.
With a market capitalization of ₹602.87 crore, Manba Finance is set to list on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on September 30, 2024. Hem Securities has been appointed as the lead manager for the IPO, and Link Intime India will serve as the registrar.
Manba Finance has reserved 50% of its IPO shares for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and 35% for retail investors. This balanced allocation structure ensures that a wide range of investors can participate in the IPO.
Brokerage Firms’ Recommendations on Manba Finance IPO
Several brokerage firms have expressed their opinions on the Manba Finance IPO. Here’s a breakdown of their views:
- Nirmal Bang Securities: This brokerage firm has given a ‘subscribe’ recommendation, citing the company’s ability to deliver strong results despite the challenges in the rural economy. Nirmal Bang highlights the company’s attractive valuation, with a FY24 price-to-book (P/B) ratio of 1.7 times. Additionally, Manba Finance has managed to maintain a gross non-performing asset (GNPA) ratio of 4.9% in FY22, which is significantly lower than other vehicle financiers. With growth in assets under management (AUM) and return on assets (ROA) of 2.3%, the company is poised for long-term growth.
- Arihant Capital Markets: Arihant recommends subscribing to the IPO for listing gains, emphasizing Manba Finance’s growth potential in new geographic markets and its strong relationships with dealers, particularly in the growing EV sector. The firm points out that Manba Finance’s AUM is heavily concentrated in vehicle loans, which make up 97.9% of its portfolio, but its diversified funding sources and co-lending arrangements provide a solid financial foundation.
- SMIFS: While SMIFS acknowledges Manba Finance’s growth prospects, it advises investors to subscribe with caution. The company’s heavy reliance on vehicle loans and its limited national presence pose some risks. However, SMIFS highlights Manba’s robust track record and the potential for expansion into underpenetrated areas.
- Swastika Investmart: Swastika Investmart takes a cautious approach, recommending the IPO to investors with a higher risk tolerance. The brokerage firm notes the company’s strong financial metrics, such as revenue growth and net interest margin (NIM), but warns that the IPO valuation is fully priced.
- StoxBox: StoxBox offers a positive outlook on the Manba Finance IPO, recommending a ‘subscribe’ rating based on the company’s growth in AUM and improving return on equity (ROE). The brokerage firm highlights the company’s fair valuation, with a P/B ratio of 2.3 times based on FY24 book value, and its strategic focus on customer satisfaction and innovative financial products.
- Canara Bank Securities: Canara Bank Securities suggests subscribing to the IPO for long-term growth. The brokerage firm praises Manba Finance’s efforts to diversify its loan portfolio and reduce its concentration risk in two-wheeler financing. However, it notes that asset quality remains a concern, with net non-performing assets (NPA) at 3.16%.
- Marwadi Financial Services: Marwadi Financial Services has assigned a ‘subscribe’ rating, noting that the IPO is priced at a P/B ratio of 1.72 times, which is competitive compared to its peers like Arman Financial Services and MAS Financial Services. The firm believes that Manba Finance is well-positioned to expand into underpenetrated geographies.
Conclusion: Manba Finance IPO – A Strategic Investment
Overall, the Manba Finance IPO has garnered positive attention from various brokerage firms. While some caution is advised due to the company’s concentration in vehicle loans and potential risks in market volatility, the IPO presents a strong investment opportunity. Manba Finance’s strategic expansion plans, focus on customer satisfaction, and ability to tap into the growing EV market make it an attractive option for investors looking for medium to long-term gains.
You might also be interested in- NTPC Green Energy submits DRHP for proposed ₹10,000 crore IPO
