FedBank Financial Services is planning an IPO scheduled to open on November 22, 2023. Fedbank Financial Services Limited provides gold loans, home loans, real estate secured loans (LAP), and business loan services.Should you invest? Federal Bank Financial Services IPO? This article provides insight into Fedbank Financial IPO dates, details, price range, GMP, positive aspects, risk factors, and provides a complete review and analysis.
about Fedbank Financial Services Limited
The company is a retail non-bank financial company promoted by Federal Bank Limited.
According to Crisil, it has the second and third lowest cost of borrowing among its peers in Micro, Small and Medium Enterprises, Gold Loans, MSMEs and Gold Loans in India. The company has the third fastest AUM growth rate among peer NBFCs in India, with a three-year CAGR of 33% from FY2020 to FY2023, and the fourth fastest year-on-year CAGR for the three months ended June. AUM growth of 42% was recorded. 30th, 2023.
The company is one of the five NBFCs promoted by private banks in India and is the fastest growing gold loan NBFC in India among its peers as of March 31, 2023.
As of June 30, 2023, 86.24% of the total loan assets were secured against tangible assets, i.e. gold or customer property.
They focus on catering to the small, medium and medium-sized enterprises and emerging self-employed sectors.
According to the CRISIL report, Indian financial institutions have little focus on the ESEI and MSME segments. They believe that this segment is growing rapidly and offers significant opportunities for further expansion. We have a range of products customized to meet the needs of our customers. This includes mortgage loans such as home loans. A small ticket against property. Medium ticket LAP, unsecured business loan, gold loan.
The company had the third-highest spending growth rate among its peers, with a three-year CAGR of 35% from FY2020 to FY2023.
They are rated ‘AA’ by CARE for non-convertible debentures since 2022 and ‘AA-‘ by India Ratings and Research Private Limited for NCDs and bank loans since 2018. is rated. These are promoted by the Bundesbank. Believing that this will increase a certain level of trust among stakeholders.
Bundesbank will continue to hold more than 51% of the issued share capital after the acquisition is completed.
Federal Bank Financial Services IPO date, price range and size
|IPO start date||November 22, 2023|
|IPO deadline||November 24, 2023|
|IPO listing date||December 5, 2023|
|Type of problem||Book Built Issue IPO|
|face value||10 rupees per share|
|IPO price range||133 to 140 rupees per share|
|lot size||107 shares|
|Exhibition location||BSE and NSE|
|Total publication size||Rs. 1,092.6 billion|
|Latest issue||Rs. 600 million|
|OFS||Rs. 492.26 billion|
Target of IPO
Fedbank Financial Services’ IPO size is Rs 1,092.26 crore, including both fresh issue and OFS.
#1 – Offering price (OFS) 492.26 million rupees – This becomes the property of the selling shareholder and the company does not receive any profit from it.
#2 – Latest issue of Rs 60 billion – These funds will be used to:
- Strengthens the company’s Tier I capital base to meet the company’s future capital requirements as its business and assets grow.
- Conference offer cost.
Fedbank Financial Services Limited Financials
Below is Fedfina’s financial situation.
|Fiscal year end/period end (amount in billions)|
|Period ends||March 31, 2021||March 31, 22||March 31, 23||September 30, 23|
|Profit after tax||61.68||103.46||180.13||53.88|
|reserves and surplus||544.45||832.00||1,021.52||1,076.67|
|Total loan amount||4,328.09||5,016.84||7,135.82||7,619.52|
Fedbank Financial Services IPO Price Valuation
- IPO price range is Rs 133 to Rs 140 per share
- Considering last year’s FY23 EPS of Rs 5.59, the P/E ratio is 25x.
- Considering the last three years’ weighted EPS of Rs 4.26, the P/E ratio is 33x.
- Comparison with listed peers
- SBFC Finance’s PER is 48.3 times (highest value)
- Manappuram Finance is trading at a P/E ratio of 8x (lowest).
- The industry average PER is 25.5 times.
- Therefore, the IPO price range of 25x to 33x P/E for this IPO is perfectly priced.
Positive factors for investing in Federal Financial Services IPO
Positive factors to invest in this company include:
- Low-cost borrowing: The company boasts the second and third lowest borrowing costs among its peers in MSME, Gold Loans and MSME and Gold Loans in India, giving it a competitive advantage in terms of financial efficiency.
- Impressive asset growth: With the third fastest AUM growth among Indian NBFCs and the fourth fastest year-on-year AUM growth, the company has demonstrated strong financial performance, indicating sustained growth potential.
- Focus on MSME and ESEI: The company has a strategic focus on serving the largely unserved SMB and Emerging Self-Employed Employees (ESEI) segment, providing significant growth opportunities in underserved markets. doing.
- Diverse product portfolio: A well-tailored suite of products, including home loans, real estate-backed small and medium-sized ticket loans, unsecured business loans, and gold loans, caters to different customer needs and increases revenue streams and customer satisfaction. Masu.
- Secured loan assets: The majority (86.24%) of the company’s total loan assets are secured against tangible assets such as gold and customer property, reducing the risks associated with unsecured lending.
- Strong financial valuation: The company has been rated ‘AA’ by CARE for non-convertible debentures since 2022 and ‘AA-‘ by India Ratings and Research Private Limited for NCDs and bank loans since 2018. , indicating high credibility.
- Promotions by Federal Bank: Being one of the five NBFCs promoted by private banks in India, the company benefits from some level of trust among its stakeholders as the Union Bank continues to hold over 51% of the issued share capital. is recieving.
- Geographic presence: The company has a strong presence in 17 states and union territories, particularly those that contribute over 75% of India’s GDP, and is strategically located in economically important regions.
- Innovative “phygital” model: The company employs a “phygital” doorstep model that combines digital and physical efforts to engage customers, provide customized services, and maintain continuous contact with customers.
- Technology-driven underwriting: Our core underwriting model leverages technology by combining electronic data with physical information to increase efficiency and enable us to effectively verify customer creditworthiness.
- Low non-performing assets (NPA): The company’s effective underwriting process has resulted in relatively low gross and net NPAs across all products, indicating a sound risk management strategy.
- Rating as a comfortable place to work: Being recognized as a Great Place to Work from 2021 to 2023 reflects a positive work culture and can contribute to increased employee satisfaction and productivity.
- Strong track record of achieving revenue and profit growth in the past.
Negative factors or risk factors for investing in this IPO
- IPO objects include both OFS and new issues. The OFS portion is paid to the selling shareholder and the company receives no profit.
- We may experience mismatches between our assets and liabilities, which could affect our liquidity and, as a result, adversely affect our operations and profitability.
- We have had negative cash flows in the past and may continue to have negative cash flows in the future.
- As on June 30, 2023, 93.65% of the total assets under management were located in Gujarat, Maharashtra, Telangana, Andhra Pradesh, Tamil Nadu, Karnataka, Puducherry and Delhi. Accordingly, the company’s operations are concentrated in his six states and his two union territories and any adverse developments in these regions could have an adverse impact on the company’s operations.
- Because we handle large amounts of cash and gold jewelry across a distributed branch network, we are exposed to operational risks such as employee negligence, fraud, petty theft, robbery, and embezzlement, which could adversely affect our results of operations and financial condition. There is sex.
- If we are unable to maintain our capital adequacy ratios, our business, operating results, and financial results may be adversely affected.
- Its business, as well as the brand and reputation of the Promoter, Commonwealth Bank and Commonwealth Bank Group Entities, depends on a well-respected and well-known brand, and failure to maintain, protect and enhance that brand It will hurt your business.
- A deterioration in the performance of pools of receivables that have been securitized and transferred to banks or other institutions could have an adverse effect on their financial results.
- There are pending lawsuits against the Company and its promoters. An adverse decision in such proceedings could subject us/them to legal liability/fines and could have an adverse effect on our business, cash flows and reputation.
- They have entered into, and will continue to enter into, related party transactions that may involve conflicts of interest.
- Conflicts of interest may arise from certain common business objectives shared by the promoter and the company.
- Investors should consider all risk factors set out below. FedBank Financial Services IPO RHP.
Fedbank Financial Services IPO GMP
Shares of Fedbank Financial Services Ltd. were trading in the gray market at a premium of Rs 8 to Rs 12 as on November 19, 2023.
Fedbank Financial Services IPO schedule (start date, end date, listing date)
|IPO start date||November 22, 2023|
|The IPO will close in||November 24, 2023|
|Basis for allocation||November 30, 2023|
|Initiate refund||December 1, 2023|
|Credit of shares to Demat.||December 4, 2023|
|Listing date||December 5, 2023|
|Deadline time for UPI obligation confirmation||November 24, 2023 – 5:00 p.m.|
Fedbank Financial Services IPO – To Buy or Not to Buy?
Investors should consider all the pros and cons before evaluating whether this IPO is good or bad for their investment.
- There are several positive elements to this IPO. The company enjoys a competitive advantage with its second-lowest and third-lowest borrowing costs among its peers, demonstrating financial efficiency. The company has shown strong financial performance and ranks third in terms of AUM growth among Indian NBFCs. The company focuses on the underserved MSME and ESEI segments and has a diversified product portfolio that includes secured loans against tangible assets. With its high financial rating, promotion by the Bundesbank, wide geographical presence and innovative “phygital” customer engagement, the company is strategically positioned for sustained growth. Moreover, its technology-driven underwriting process, low His NPA and recognition as a ‘Great Place to Work’ also contribute to its appeal.
- When considering investing in this IPO, you should also consider the potential risks. An IPO consists of an offer for sale (OFS) portion that benefits selling shareholders without directly benefiting the company. The company faces the risk of asset-liability mismatches that impact liquidity, which could impact operations and profitability. Past negative cash flows and concentration of business in specific regions are issues. IPOs are also fully priced.
Investors can invest in this IPO after considering all the positive and risk factors.
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