Manba Finance IPO Opens: Top 10 Things to Know

Manba Finance IPO opens for bidding

Manba Finance’s initial public offering (IPO) opens for bidding from Monday, September 23, and will remain open until Wednesday, September 25. The company is pricing its shares between Rs 114-120 each, with a minimum application requirement of 125 equity shares, and additional bids in multiples of that amount. Founded in 1998, Manba Finance is a non-banking financial company (NBFC) providing financing options for new and electric two-wheelers (2Ws and EV2Ws), three-wheelers (3Ws and EV3Ws), used cars, small business loans, and personal loans.

Manba Finance’s Rs 150.84 crore IPO consists entirely of a fresh issue of 1,25,70,000 equity shares. The net proceeds from the offering will be used to strengthen the company’s capital base to support future capital needs.

Ahead of the IPO, Manba Finance secured Rs 45.25 crore from eight institutional investors by allotting 37.71 lakh equity shares at Rs 120 each. The anchor investors included Chartered Finance & Leasing, Finavenue Capital Trust, Antara India Evergreen Fund, Belgrave Investment Fund, Meru Investment Fund, NAV Capital VCC, Rajasthan Global Securities, and Vikas India EIF I Fund.

Manba Finance IPO Opens: Top 10 Things to Know Manba Finance primarily targets employees and self-employed individuals, offering tailored financial solutions to meet the needs of these customer groups. The company typically finances up to 85% of the vehicle’s purchase price, requiring customers to cover the remaining balance.

With a robust branch network in urban, semi-urban, and metropolitan areas, Manba Finance extends its services to nearby rural regions. The company has established partnerships with over 1,100 dealers, including more than 190 electric vehicle (EV) dealers across Maharashtra, Gujarat, Rajasthan, Chhattisgarh, Madhya Pradesh, and Uttar Pradesh.

Manba Finance IPO Opens: Top 10 Things to Know  Manba Finance has set aside 50% of its IPO shares for qualified institutional bidders (QIBs), 15% for non-institutional investors (NIIs), and 35% for retail investors. In FY 2024, the company reported a net profit of Rs 31.42 crore on a revenue of Rs 191.63 crore, compared to a net profit of Rs 16.58 crore and revenue of Rs 133.32 crore in the previous year. The IPO values the company at Rs 602.87 crore.

Hem Securities is the sole book running lead manager for the IPO, with Link Intime India as the registrar. Shares are expected to list on BSE and NSE by Monday, September 30.

Manba Finance IPO Opens: Top 10 Things to Know   Nirmal Bang Securities has given a “subscribe” rating for Manba Finance’s IPO, noting that despite a slow rural recovery after COVID-19, the NBFC focused on the two-wheeler segment has shown strong performance. Manba’s gross non-performing assets (GNPA) peaked at 4.9% in FY22, which is comparatively lower than other vehicle financiers.

The firm highlighted that, driven by a low base and geographic expansion, Manba grew its assets under management (AUM) at a 37% CAGR from FY22 to FY24, generating a return on assets (ROA) of 2.3% and return on equity (ROE) of 10.1%. The IPO valuation, with a FY24 price-to-book (P/B) ratio of 1.7x, is considered attractive.

Manba Finance IPO Opens: Top 10 Things to Know   Arihant Capital Markets has assigned a “subscribe for listing gains” rating to Manba Finance’s IPO, highlighting the company’s strong potential for growth through its strategic expansion into 66 locations across six states. By utilizing a hub-and-spoke model and emphasizing customer and dealer satisfaction, Manba has achieved significant growth in its assets under management (AUM). The company plans to diversify its portfolio by introducing used car loans, small business loans, and personal loans.

Arihant noted that Manba’s solid relationships with dealers enable it to effectively meet customer financing needs, particularly in the expanding electric vehicle (EV) market, where new vehicle loans account for 97.90% of its AUM. Additionally, diversified funding sources and a co-lending arrangement contribute to improved financial management.

Manba Finance IPO Opens: Top 10 Things to Know   SMIFS has rated Manba Finance’s IPO as “subscribe with caution.” The company holds approximately 97.90% of its loan portfolio in new vehicle loans, with an average ticket size (ATS) of around Rs 80,000 for two-wheelers (2Ws) and Rs 1,40,000 for three-wheelers (3Ws). Manba Finance has established partnerships with over 190 electric vehicle (EV) dealers and provides various incentives to customers for purchasing electric two-wheelers (EV2Ws) and three-wheelers (EV3Ws).

SMIFS recommends that investors with a medium risk appetite consider subscribing to the issue as a long-term investment. While acknowledging that the company is relatively small with a limited national presence and elevated non-performing asset (NPA) levels, they also note its solid growth track record and promising future growth opportunities.

Manba Finance IPO Opens: Top 10 Things to Know   Swastika Investmart has given Manba Finance’s IPO a “subscribe with caution” rating. The company is a leading financier in the two- and three-wheeler segments and plans to expand its product offerings. It has shown strong growth in revenue, net interest margin (NIM), and other positive financial metrics. However, Swastika notes that the IPO valuation appears to be fully priced.

They advise that investors with a high-risk tolerance may consider applying for the IPO, but emphasize the importance of carefully assessing the company’s size, potential risks, and market volatility.

Manba Finance IPO Opens: Top 10 Things to Know  StoxBox has rated Manba Finance’s IPO as a “subscribe.” The company operates through over 1,100 dealers across six states, and its assets under management (AUM) reached Rs 936.86 crore in FY24, reflecting a 37.5% compound annual growth rate (CAGR).

Profit after tax increased to Rs 31.42 crore, and return on capital employed (RoCE) margins improved to 15.66%, while net non-performing assets (NPA) decreased to 3.16%. Manba Finance intends to use the proceeds from the IPO to further expand its offerings.

The issue is priced at a price-to-book value (P/BV) of 2.3 times based on FY24 book value, suggesting a fair valuation. With a strong emphasis on customer satisfaction and innovative products, Manba Finance is well-positioned to meet changing market demands. StoxBox recommends subscribing to the IPO with a medium to long-term investment perspective.

Manba Finance IPO Opens: Top 10 Things to Know  Canara Bank Securities has rated Manba Finance’s IPO as a “subscribe for long term.” The company is strategically diversifying its product portfolio to mitigate concentration risk in two-wheeler financing and explore new market segments. By leveraging advanced technology, Manba Finance optimizes its operations and ensures quick loan disbursement, providing customers with a fast turnaround time.

The firm noted that Manba has demonstrated solid financial performance, with net interest income and profit after tax growing at compound annual growth rates (CAGR) of 36% and 80%, respectively, from FY22 to FY24. However, the company still faces significant concentration risk due to its heavy reliance on two-wheeler loans, and its asset quality is lower compared to its peers. Despite these concerns, Canara Bank Securities recommends a “subscribe” rating for the IPO.

Manba Finance IPO Opens: Top 10 Things to Know  Marwadi Financial Services has rated Manba Finance’s IPO as a “subscribe.” The company is set to list at a price-to-book (P/B) ratio of 1.72, with a market capitalization of Rs 602.87 crore. In comparison, its peers—Baid Finserv, Arman Financial Services, and MAS Financial Services—are trading at P/B ratios of 1.18, 2.27, and 2.84, respectively.

Marwadi Financial Services believes that Manba Finance has the potential to expand into new, underpenetrated markets and is available at a reasonable valuation compared to its peers, warranting their “subscribe” rating for the IPO.