Exploring the Manba Finance Limited IPO: A Deep Dive into Financial Market Dynamics

Table of Contents

Introduction to Manba Finance Limited IPO

Manba Finance Limited, a leading NBFC-BL (Non-Banking Financial Company – Base Layer) specializing in vehicle financing, is gearing up for its Initial Public Offering (IPO) from September 23 to 25, 2024. This blog provides an in-depth analysis of the IPO, the company’s business model, and its competitive landscape, offering potential investors valuable insights.

Check Manba Finance Limited Company Details

IPO Basics and Manba Finance Limited’s Offering

An IPO (Initial Public Offering) allows a company to offer its shares to the public for the first time. Manba Finance Limited is offering its shares at a price band of ₹114 to ₹120 per share, with a total issue size of ₹150.84 crore, entirely consisting of a fresh issue. This IPO will help the company raise capital while increasing its market visibility and liquidity.

Manba Finance Limited: Background and Business Model

Manba Finance Limited has built a strong presence in the financial services sector by focusing on vehicle financing, including loans for both new and used vehicles, electric vehicles, personal loans, and small business loans. A key differentiator is their quick loan approval process, with over 85% of loans sanctioned within the same day, giving them a competitive edge in the NBFC industry.

IPO Details and Investment Strategy

Dates: September 23-25, 2024
Price Band: ₹114 to ₹120 per share
Allocation:
50% for Qualified Institutional Buyers (QIB)
15% for Non-Institutional Investors (NII)
35% for retail investors
Lot Size: 125 shares
Minimum Investment: ₹15,000 (approximately)

These details are essential for investors planning to participate in the Manba Finance IPO, helping them prepare their investment strategy accordingly.

Here’s a detailed tabular form for the Manba Finance Limited IPO based on the information gathered:

Aspect	Details
IPO Opening Date	September 23, 2024
IPO Closing Date	September 25, 2024
Price Band	₹114 – ₹120
Face Value	₹10
Issue Size	₹150.84 Crores
Fresh Issue	₹150.84 Crores (100% Fresh Issue)
Offer for Sale (OFS)	N/A
Market Lot Size	125 Shares
Minimum Investment	₹15,000
Allocation	– QIB: 50%<br>- NII: 15%<br>- Retail: 35%
Allotment Date	September 26, 2024
Refund Initiation	September 27, 2024
Credit of Shares	September 27, 2024
Listing Date	September 30, 2024
Lead Manager	Hem Securities Limited
Registrar	Link Intime India Pvt Ltd
Promoters	Manish Kiritkumar Shah, Nikita Manish Shah, Monil Manish Shah, among others
Purpose of Issue	To augment capital base for future lending and general corporate purposes

This table encapsulates the key details of the Manba Finance Limited IPO, providing a comprehensive overview for potential investors or anyone interested in the IPO specifics.

Financial Health and Performance Metrics

Manba Finance has demonstrated significant growth, reporting a 70.2% increase in net profit to ₹16.58 crore in FY23. The company’s assets under management (AUM) grew at a compound annual growth rate (CAGR) of 13.89% from FY21 to the first half of FY24, showcasing strong operational efficiency and positive market reception.

Here’s a detailed analysis of Manba Finance Limited’s financial performance in a tabular format for better readability:

Financial Performance Table

Financial Metric	31 Mar 2022	31 Mar 2023	31 Mar 2024	Growth FY22-FY23	Growth FY23-FY24
Assets (₹ Cr)	561.46	787.25	973.75	40.2%	23.7%
Revenue (₹ Cr)	106.62	133.32	191.63	25.0%	43.7%
PAT (₹ Cr)	9.74	16.58	31.42	70.2%	90.0%
Net Worth (₹ Cr)	151.74	168.43	200.61	11.0%	19.1%
Reserves & Surplus (₹ Cr)	138.96	155.54	162.46	12.0%	4.4%
Total Borrowing (₹ Cr)	394.4	595.93	752.27	51.1%	26.2%

Financial Ratios

Ratio	Formula	31 Mar 2024
Return on Assets (ROA)	PAT / Total Assets	3.23%
Debt to Equity Ratio	Total Borrowings / Net Worth	3.75
Net Interest Margin (NIM)	(Interest Earned – Interest Expended) / Interest Earning Assets	Not Directly Provided

Analysis

Revenue and PAT Growth: The consistent growth in both revenue and PAT over the years indicates strong operational performance. The 44% revenue increase from FY23 to FY24, coupled with a 90% jump in PAT, highlights effective cost management and possibly improved margins.
Asset Growth: The assets have grown by 73% over two years, suggesting Manba Finance is significantly expanding its lending portfolio or acquiring assets, which could be a strategy to increase revenue.
Net Worth and Reserves: The net worth growth reflects a healthy balance sheet, with shareholders’ equity increasing. The reserves and surplus growth, though modest in FY24, indicate prudent financial management.
Borrowings: The substantial increase in borrowings might be a strategy to fund growth through leverage. However, this also increases financial risk, which should be monitored closely.
Financial Ratios:
- ROA: At 3.23%, it shows that Manba Finance is generating profit efficiently from its assets, though this might be conservative for an NBFC.
- Debt to Equity: A ratio of 3.75 indicates high leverage, typical for NBFCs but requires careful risk management to avoid over-leveraging.

Manba Finance Limited IPO GMP and Subscription

Here’s the updated data based on the information available up to September 25, 2024:

Manba Finance Limited IPO Overview (Updated for September 25, 2024)

Fundamental Evaluation: Investors should assess Manba Finance’s financial health, business strategy, and its market position in vehicle financing for long-term investment decisions.
Grey Market Premium (GMP): Today, the GMP stands at ₹58, suggesting a potential 48.33% gain over the IPO price if the grey market sentiment holds.
Subscription Status:
- Overall Subscription: The IPO is now subscribed 213.92 times overall, reflecting an overwhelming investor interest.
- Retail Investors: This segment has shown significant interest, with subscriptions at 105 times.
- Non-Institutional Investors (NII): This category is subscribed 404 times, indicating very high demand from this investor group.
- Qualified Institutional Buyers (QIB): Subscribed 148 times, showcasing strong institutional backing.
IPO Details:
- Price Band: ₹114 to ₹120 per share, with the market leaning towards the upper end due to high demand.
- Issue Size: Manba Finance aimed to raise ₹150.84 crore.
Market Sentiment and Analysis:
- Subscription and GMP: The robust subscription rates coupled with a steady GMP underline strong market confidence in Manba Finance, particularly in its niche market approach.
- Analysts’ Recommendations: The positive market response has led analysts to generally recommend investing, highlighted by Manba Finance’s growth potential and competitive positioning.
Investment Considerations:
- High Subscription: While it indicates strong demand, it might also include speculative interest, which could affect long-term value.
- GMP and Listing Expectations: The current GMP implies expectations of notable listing gains, though actual performance could be influenced by broader market dynamics or company-specific developments.

This scenario for Manba Finance Limited’s IPO on September 25, 2024, shows sustained strong investor interest with a slight adjustment in GMP, suggesting a stabilization in market expectations for potential listing gains.

Manba Finance Limited IPO EPS and PE ratio

Based on the information available up to September 23, 2024, regarding Manba Finance Limited’s IPO:

EPS (Earnings Per Share): The pre-issue EPS for FY24 was reported to be ₹8.34. This figure is based on the company’s financial performance up to March 31, 2024.
PE Ratio (Price to Earnings Ratio): At the upper end of the price band of ₹120 per share, using the FY24 EPS of ₹8.34, the PE ratio would be approximately ₹120 / ₹8.34 ≈ 14.39 times. This PE ratio suggests that investors are willing to pay about 14.39 times the earnings for each share, which is slightly above the industry average PE ratio mentioned at 13.45x.

These metrics indicate that:

Valuation: Manba Finance Limited’s IPO is priced with a PE ratio that might be considered on the higher side when compared to the broader market or even its industry peers, suggesting expectations of strong future growth or other qualitative factors justifying this premium.
Investment Consideration: While the PE ratio provides a snapshot of valuation, potential investors should consider other factors like growth prospects, market position, financial health, and broader market conditions. The company’s focus on vehicle financing, especially in less tapped regions, along with its operational model and management’s experience, might justify a higher valuation if these attributes lead to sustained growth and profitability.
Market Sentiment: The interest in Manba Finance’s IPO, as reflected by its subscription rates and grey market premiums, indicates strong market confidence in its business model and future prospects. However, such enthusiasm can also lead to overvaluation risks post-listing.

Given these points, while the PE ratio and EPS provide critical insights into Manba Finance Limited’s valuation at the time of its IPO, a comprehensive investment decision would require analyzing beyond just these metrics, considering the company’s business strategy, competitive landscape, and macroeconomic factors.

How to Apply for Manba Finance IPO

Investors can apply for the Manba Finance IPO by following these steps:

Log in to your demat account.
Select the number of lots you wish to apply for (minimum 125 shares).
Complete the UPI mandate process to confirm the application.

By understanding the step-by-step process, investors can ensure a smooth application experience.

Potential Risks and Considerations

While Manba Finance exhibits strong growth potential, investors should be aware of inherent risks such as market volatility, interest rate changes, and competition within the NBFC sector. These factors could influence the company’s post-IPO performance, making it essential to weigh the risks against potential rewards.

Post-IPO Expectations and Strategic Moves

After listing, Manba Finance plans to expand its geographical reach and diversify its product offerings, focusing on scaling its presence in untapped markets. This strategic expansion is expected to drive further growth and enhance shareholder value in the long term.