Manba Finance Ltd is gearing up for its upcoming Initial Public Offering (IPO) with the following details:

– IPO Open Date: September 23, 2024
– IPO Close Date: September 25, 2024
– Issue Type: Book Built IPO
– Face Value: ₹10 per equity share
– Price Range: ₹114 to ₹120 per share
– Minimum Order Size: 125 shares
– Listing Exchanges: BSE and NSE

The IPO consists of  12.57 million shares with a face value of ₹10 each, aiming to raise **₹150.84 crore** at the higher price range. The allocation of shares is as follows:

– 50% for Qualified Institutional Buyers (QIBs)
– 35% for Retail Investors
– 15% for Non-Institutional Investors (HNIs)

Since the offering consists solely of a fresh issue of shares, the company will benefit directly from the proceeds. The net funds raised will be used to support the company’s future capital needs, particularly for onward lending activities.

IPO Alert: Manba Finance Seeks ₹150.84 Crore The company’s promoters include Manish Kiritkumar Shah, Nikita Manish Shah, Monil Manish Shah, along with Manba Investments and Securities Pvt Ltd, Avalon Advisory and Consultant Services Pvt Ltd, Manba Fincorp Pvt Ltd, Manba Infotech LLP, and Manish Kiritkumar Shah (HUF). Collectively, the promoters and promoter group currently own 100% of the company’s shares prior to the IPO.

IPO Alert: Manba Finance Seeks ₹150.84 Crore  The company, a Non-Banking Financial Company-Base Layer (NBFC-BL), provides financial services across several segments, including new two-wheelers, three-wheelers, electric two- and three-wheelers, used cars, small business loans, and personal loans. As of March 31, 2024, it manages an asset base exceeding ₹900 crore.

Its primary customer base consists of salaried individuals and self-employed professionals. The company offers vehicle loans with an average loan size of ₹80,000 for two-wheelers and ₹1,40,000 for three-wheelers.

The company has built strong partnerships with more than 1,100 dealers, including over 190 EV dealers, operating in Maharashtra, Gujarat, Rajasthan, Chhattisgarh, Madhya Pradesh, and Uttar Pradesh.

IPO Alert: Manba Finance Seeks ₹150.84 Crore  Manba Finance Ltd has shown consistent growth in key financial metrics over recent years. From FY22 to FY24, the company saw interest income rise from ₹93.98 crore to ₹168.36 crore, while total income grew from ₹106.62 crore to ₹191.63 crore.

Profit before tax increased from ₹12.66 crore to ₹38.89 crore, and net profit surged from ₹9.74 crore to ₹31.42 crore during the same period. The company achieved a Compound Annual Growth Rate (CAGR) of 34% in total income and 76% in net profit between FY22 and FY24.

Among its peers, the company recorded the second-highest disbursement CAGR of 47.6% over this period and ranked third in assets under management (AUM) per branch, standing at ₹14.41 crore at the end of FY24. Additionally, it achieved rapid branch expansion, with a CAGR of 40.3%, growing from 33 branches in FY22 to 65 in FY24. The company also led in terms of yield on advances at 23.9% and had the fourth-highest net interest margin (NIM) at 9.8% within its peer group.

The IPO is priced with a price-to-book value (P/BV) ratio of 2.25x, based on a net asset value (NAV) of ₹53.26 as of March 31, 2024. At the upper end of the price band, the post-IPO P/BV ratio is 1.72x. The price-to-earnings (PE) ratio, calculated using FY24 earnings and fully diluted paid-up equity, stands at 14.

In terms of valuation and returns, Manba Finance Ltd has outperformed its listed peers, except for Arman Financial Services Ltd. However, it’s important to note that Manba Finance has a high concentration in two-wheeler loans, which made up 92% of its AUM in FY24.

In contrast, Arman Financial Services Ltd had just 3% of its AUM in two-wheeler loans, highlighting the differences in their business models and target markets. Arman’s AUM is more diversified, making the two companies less directly comparable.

The Indian auto industry is on track for strong growth, fueled by a youthful population, rising incomes, and increasing demand for personal vehicles. As a key player in auto financing, Manba Finance is well-positioned to meet this growing demand, particularly with the festive season likely to drive further momentum. Given its promising growth outlook, we recommend subscribing to the IPO for long-term investment.