A mix of credit channels, presence across fast growing segments of micro, small, and medium enterprises (MSME) and consumer financing combined with reasonable valuation makes the IPO suitable for long-term investors looking for an exposure to the NBFC sector.
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NACL focuses on six lending segments including MSME, microfinancing, consumer, vehicles, affordable housing, and agriculture-the first three segments together contributed nearly 90% to the assets under management (AUM) in FY24. AUM grew by 28% annually to ₹11,710 crore between FY22 and FY24. NACL uses three channels including lending, placement, and debt fund management to cater to the credit market. The share of direct to customer lending in the total AUM improved to 49.8% in FY24 from 23.3% in FY22. Placement refers to providing credit to originating partners from a large pool of investors through a proprietary technology platform Nimbus. Under fund management, NACL manages debt funds through a subsidiary, NAIM. These funds invest in originating partners. As of March 2024, NACL raised ₹3,745 crore across 10 funds.
Financials
Revenue from operations increased by 44% annually to ₹1,890 crore while net profit grew by 32.2% to ₹317.7 crore between FY22 and FY24. The gross nonperforming assets (GNPA) ratio shrank to 45 basis points from 50 basis points while net interest margin increased to 8.3% from 5.5% during the period. Return on assets rose to 3% from 2.6% by similar comparison.
Valuation
Considering ₹382 crore equity infusion in April 2024 and the IPO fresh offer, the company demands a price-book multiple of up to 1.3. Other profitable NBFCs that operate in NACL’s business segments trade at a P/B of around three or higher.
