Muthoot Microfin lists at a discount; opens at Rs. 278 per share on the BSE

Muthoot Microfin Limited, a subsidiary of the Muthoot Pappachan Group, engaged in providing micro-loans targeted rural areas across India, marks its debut on the Indian stock market today.

Upon its debut on the BSE, the stock opened at Rs 278 per share, representing a 4.5% discount compared to the final issue price of Rs 291 per share. Simultaneously, on the NSE, the stock debuted at Rs 275.30 per share, indicating a 5.4% discount from its final issue price.

At present, the stock is trading at Rs 272.70 per share on the BSE, having reached intraday highs and lows of Rs 280.80 and Rs 265.30, respectively. The current market capitalisation of the company stands at Rs 4649.32 crore.

IPO Proceeds 

The objectives for utilising the funds encompass two primary aspects: Supporting our existing business activities and facilitating the proposed activities to be financed through the Net Proceeds.

 Company profile:

Muthoot Microfin Limited, a subsidiary of the Muthoot Pappachan Group, is engaged in providing micro-loans targeted primarily at female customers residing in rural areas across India.

The company offers various loan products, including group loans tailored for livelihood solutions. These encompass income-generating loans, Pragathi loans aimed at providing working capital to existing customers, and individual loans to support diverse income-generating activities.

Moreover, Muthoot Microfin Limited extends life betterment solutions, facilitating access to loans for essential items such as cell phones, solar lights, and household appliances. Additionally, the company provides health and hygiene loans designed to enhance sanitary facilities for individuals and communities.

Furthermore, the company offers secured loan options, including gold loans and their Muthoot Small & Growing Business (“MSGB”) loans, providing a diverse range of financial solutions to meet the varying needs of their customer base.

Subscription details: 

On December 20, 2023, the final day of the IPO window, the IPO experienced a moderate response, particularly in comparison to other recently listed IPOs, achieving a subscription rate of 12.30 times. The public issue garnered moderate interest, with the retail category oversubscribed by 8 times, the QIB category attaining a subscription rate of 18.35 times, and the NII category reaching a subscription rate of 13.87 times.

The company attracted Rs 285 crore from various anchor investors by allocating 97.93 lakh equity shares at Rs 291 per share. The complete lock-in period for these anchor investors ends on April 26, 2024.

The IPO price range was set between Rs 277 and Rs 291, with a face value of Rs 10 per share and a lot size of 51 shares. The total size of the company’s IPO was Rs 960 crore, and the final share issue price was fixed at Rs 291 each.

Financial Performance:

Conclusion: 

The key dilemma confronting investors revolves around whether to retain or sell their shares. Individuals who participated in the IPO solely to benefit from immediate listing gains have faced disappointment as the stock debuted at a discount compared to its final issue price and may consider closing their positions. On the contrary, investors with a higher risk appetite might choose to retain their shares for the medium to long term, as this approach could potentially yield benefits over time.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.