SBFC Finance made a strong debut on the stock exchanges on Wednesday, with the stock price of the non-banking finance company (NBFC) listing at ₹82 on the National Stock Exchange (NSE), a premium of 43.8% against the initial public offering (IPO) price of ₹57 apiece. On the Bombay Stock Exchange (BSE), the stock was listed at ₹81.99 per share.
Post listing, SBFC Finance shares gained as much as 66% to hit an intraday high of ₹94.7 on the NSE. On the volume front, a total of 18 crore shares changed hands over the counter on the BSE and the NSE. The market capitalisation stood at ₹10,010 crore at the time of reporting.
The strong listing of SBFC Finance was in line with Street expectations as the stock was commanding premium up to 40-45% over the upper price band in the grey market. Most analysts have assigned a “Subscribe” rating for the issue on a short-to-medium-term basis, citing its attractive valuations, strong anchor book, as well as consistent improvement in asset quality, and decent business performance.
The Mumbai-headquartered NBFC firm raised ₹1,025 crore via the IPO route, which opened for subscription between August 3 to August 7. The IPO price was fixed at ₹54 to ₹57 per share and the lot size was 260 shares. This means, the minimum application amount for this IPO was ₹14,820, at the upper end of the price band.
The IPO of SBFC Finance had received an overwhelming response from investors, with its issue subscribing by a massive 70.16 times. The public issue, which comprised a fresh equity issue of up to ₹600 crore and an offer for sale (OFS) of up to ₹425 crore, garnered a strong response from qualified institutional buyers (QIBs) as the portion reserved for them was booked 192 times, followed by non-institutional investors (NIIs) at 49 times and retail investors at nearly 11 times.
The company intends to use the capital raised from the fresh issue of equity shares to boost its capital base to meet future capital requirements.
Ahead of the public offer, the private equity firm Arpwood-backed company had raised ₹150 crore from Singapore-based Amansa Capital in a pre-IPO placement.
Formed in 2008, SBFC Finance is a systemically important, non-deposit-taking Non-Banking Finance Company (NBFC-ND-SI), which provided secured MSME loans and loans against gold, with a majority of the borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals. The company focuses on disbursing loans with a ticket size in the range of ₹5 lakh to ₹30 lakh, and as of March 31, 2023, 87.27% of its assets under management (AUM) had a ticket size within this range.
Among MSME-focused NBFCs in India, the company has one of the highest AUM growth, at a CAGR of 44% in the period from fiscal 2019 to fiscal 2023. The company has also witnessed healthy disbursement growth, at a CAGR of 40% between fiscal 2021 and fiscal 2023, as per Crisil report.
The company has an AUM of ₹4,943 crore and is well diversified across India, with 31% in the north, 38% in the south, and 31% in the west and east. It serves customers in Tier II and Tier III cities with expansive footprint in 120 cities, spanning 16 Indian states and two union territories, with 152 branches.
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