The dull listing can be attributed to the absence of uniqueness in the company’s business model.
Analysts said a series of NBFCs getting listed in the last few months and a wave of other IPOs led to a divergence of focus from Muthoot.
Furthermore, the company is more focused on the Southern region and valuation is on par with other listed NBFCs, which might be a reason for the tepid debut on the bourses.
“We believe that investors who have been allotted shares can hold it from a medium- to long-term perspective as the NBFC sector has multiple long-term tailwinds on the sectoral front,” said Shreyansh Shah, research analyst at StoxBox.
The Rs 960-crore IPO of Muthoot Microfin was subscribed 11.52 times at close.
The microfinance firm aims to augment its capital base through the proceeds from the initial public offering. As per the RBI regulations, microfinance institutions are required to maintain a minimum capital adequacy of 15% consisting of tier-I capital and tier-II capital.As of March 2023 end, the company’s capital adequacy was 21.87%, of which tier-I capital base was 21.87%.
“Since our company continues to grow our loan portfolio and asset base, it will require additional capital in order to continue to meet applicable capital adequacy ratios with respect to its business,” Muthoot Microfin said.
Muthoot Microfin is the fourth-largest microfinance company in India in terms of gross loan portfolio. It is the third-largest in south India, with the largest in Kerala in terms of market share, and a key player in Tamil Nadu with an almost 16% share.
As of March 2023, its gross loan portfolio stood at Rs 9,200 crore, and it had 2.77 million active customers. For FY23, the company reported a revenue of Rs 1,430 crore and a profit of Rs 164 crore.
In the six months ended September 2023 period, the company’s revenue increased 72% year-on-year to Rs 1,042 crore, while profit jumped multifold to Rs 205 crore.
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