SBFC Finance had a debut on Dalal Street with its shares being listed at Rs 82 each. This represents a premium of 44% compared to its issue price of Rs 57, on the NSE. The company’s initial public offering received interest, backed by the Clermont Group and Arpwood Group. Their aim is to strengthen the company’s capital base in order to support growth opportunities.
SBFC Finance made a strong entry onto Dalal Street on Wednesday, August 16. The stock was listed at Rs 82 per share, representing a substantial premium of 44 percent compared to its issue price of Rs 57 per share on the National Stock Exchange (NSE). Similarly, it debuted at a premium of 44 percent on the BSE, trading at Rs 81.99 per share.
The new-age financial services firm’s shares were already in high demand before their official listing. In the grey market, a day prior, the shares commanded a premium of Rs 30 per share, equivalent to about 53 percent. Although SBFC had been consistently trading at a 70 percent premium in the unofficial market until last week, the premium dipped to 40-45 percent over the upper price band since the start of this week, according to analysts.
The shadow lender’s primary offering of Rs 1,025 crore received an overwhelming response from investors during the bidding process, with an oversubscription of more than 74 times. The IPO, offered between August 3-7, was priced in the range of Rs 54-57 per share, with a lot size of 260 shares.
The category for qualified institutional bidders saw an oversubscription of 203.61 times, while non-institutional investors’ participation reached 51.82 times. The retail investors’ quota was subscribed 11.60 times, and the employee portion garnered 6.21 times bids.
Analysts held a largely positive outlook on the IPO, recommending investors to subscribe due to the company’s expansive pan-India network, robust return ratios, efficient business model, and favorable cost of funds. However, they highlighted concerns about higher valuations and sensitivity to interest rates as potential risks for the company.
Prashanth Tapse, Research Analyst & Senior VP at Mehta Equities, projected a listing gain of around 35-40 percent, down from the earlier expected 65-70 percent, given the subdued market sentiment.
Backed by private equity firm Clermont Group and investment bank Arpwood Group, SBFC Finance’s public issue consisted of a fresh share issuance of Rs 600 crore and a Rs 425 crore offer for sale by Arpwood Group entities. The proceeds from the fresh issuance will be utilized to bolster the company’s capital base for future capital requirements.
ICICI Securities, Axis Capital, and Kotak Mahindra Capital Company acted as the book-running lead managers, while KFin Technologies served as the registrar for the offer.
For the fiscal year ending in March 2023, SBFC Finance recorded revenues of Rs 740 crore, with a net profit of Rs 149.7 crore.
Founded in 2008, SBFC Finance operates as a non-deposit-taking, non-banking financial company, extending loans such as secured MSME loans and loans against gold primarily to entrepreneurs, small business owners, self-employed individuals, and working-class individuals. The company boasts an extensive pan-India presence, with over 157 branches across 105 cities in 16 states and two union territories.
