About Arohan Financial Services IPO

Established in 1991, Arohan Financial is one of the leading NBFC-MFIs in India. The company started its microfinance business in 2006. It operates in low-income, unpenetrated states of the country. The offerings of Arohan Financial Services include credit as well as insurance products. The former includes income-generating loans and other forms of financial assistance, while the latter covers life and health insurance products.

Arohan Financial Services IPO Objectives

- Fulfilment of general corporate purposes
- Augmenting the capital base
- Prepayment or repayment of the entire or a small part of its outstanding borrowings

Arohan Financial Services IPO - Details

Arohan Financial has filed preliminary papers with SEBI to raise Rs. 1750 crores to Rs. 1800 crores. As per its DRHP, the company’s IPO will include a fresh issue of Rs. 850 crores and an offer for sale (OFS) of 27,055,893 shares by existing shareholders.

Qualified institutional buyers (QIBs) can subscribe to up to 50% of the IPO, whereas retail individual investors will have up to 35% of the reserved portion. 15% of the issue size will be set aside for non-institutional investors. Furthermore, eligible employees of this company can subscribe up to 5% of Arohan Financial’s initial offer.

Opening Date

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Closing Date

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Price Band

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per equity share

Issue Size

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Face Value

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per equity share

Market Lot

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Opening Date

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Closing Date

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Price Band

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per equity share

Issue Size

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Face Value

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per equity share

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Listing at NSE, BSE

Arohan Financial Services IPO Important Dates

IPO Open Date To be announced
IPO Close Date To be announced
Basis Of Allotment Date To be announced
Initiation Of Refunds To be announced
Credit Of Shares To
Demat ACcount
To be announced
IPO Listing Date To be announced
UPI Mandate Expiry Date To be announced

Why Should You Invest in Arohan Financial Services IPO?

Besides an impressive scale of operations, this company has healthy profitability indicators and a highly experienced management team that has a proven track record.

Furthermore, Arohan has a well-diversified borrowing profile owing to a high share of funding received from banks. With the Indian financial services industry set to expand in the upcoming years, the outlook for this company appears to be quite positive.

Hence, investors might consider subscribing to its initial offer. That said, investors should take into account various aspects like the company’s weaknesses, financials, etc., before applying.

Financial Highlights

For the Year/Period Ended Total Revenue (in million)  Total Assets (in million) Total Expenses (in million) Profit After Tax (in million)
30 September 2020 Rs. 5073.93 Rs. 58,131.17 Rs. 4258.83 Rs. 625.64 
31 March 2020  Rs. 9345. 06 Rs. 52,808.21 Rs. 7,669.20  Rs. 1268.01 
31 March 2019 Rs. 6515.93 Rs. 38,530.97 Rs. 4,744.56 Rs. 1,276.40
31 March 2018 Rs. 3278.71 Rs. 23,036.70  Rs. 2804.40  Rs. 309.75

How to apply for Arohan Financial Services IPO?

You can apply for the Arohan Financial Services IPO in these ways:

UPI
Link your bank account to a reliable UPI ID and register it with your Angel One account. Proceed to book Arohan Financial Services IPO shares using the ID, confirm the payment on the UPI app, and block the amount for allotment.

Demat Account

1. If you are already a client of Angel One, apply directly for Arohan Financial Services IPO, click here.
2. If you’re a new investor Open DEMAT Account for free with Angel One to begin your investment journey.

Arohan Financial Services – Noteworthy Highlights

As per a report published by CRISIL, Arohan Financial Services was the fifth-largest NBFC-MFI in India as of 30 September 2020. Some more noteworthy highlights of this company include the following:

- As of 30 September 2020, the company catered to approximately 2.21 million borrowers across 17 states in India.

- Between FY2018 and 2019, Arohan Financial recorded the highest CAGR (49%) in relation to customer growth among the top 5 NBFC-MFIs in India.

- Arohan Financial’s microfinance segment comprised a network of 710 branches across 11 states in the country as of 30 September 2020.

- Between FY2017 and 2018, Arohan Financial Services had the second-highest CAGR (68%) in terms of gross loan portfolio among the NBFC-MFIs in India.

- This company has raised funds worth approximately $20 million over 3 rounds. its last funding was on 18 May 2017.

Arohan Financial Services IPO - SWOT Analysis

strengths

Strengths

  • Impressive Scale of Operations: In terms of AUM, this company is one of the largest NBFC-MFIs in India. As of 30 June 2020, Arohan’s AUM stood at approximately Rs. 4,862 crores. It has a proven track record of 13 years.
  • Sufficient Capitalisation Profile: Arohan Financial has a strong capitalisation profile owing to adequate internal capital generation and equity infusions on a regular basis.
  • Experienced Management Team: This company’s management team includes seasoned professionals who have years of experience in the domain of financial services.
  • Favourable Profitability Indicators: Arohan’s NIM stood at 10.49% of AMA in FY2020, whereas in the previous financial year, it was 11.14%. Operating expenses of this company diminished to just over 4.5% of AMA in FY2020 in comparison to 5.43% in FY2019.
Weaknesses

Weaknesses

  • Risky Asset Class: Arohan’s portfolio loans in its microfinance segment are unsecured. Moreover, they are backed by group-based social security. Thus, the company has a risky asset class.
  • Limited Diversification of Revenue Streams: A significant portion of this company’s revenue in FY2020 comprised interest income earned from its microfinance business. Owing to this single-line nature of operations, there is restricted diversification in relation to this company’s revenue stream.
Opportunities

Opportunities

  • Expansion of Financial Services Sector: As per projections, the financial services industry is set to expand rapidly till 2035 in India. Some of the major factors that would influence this growth include rising income and the government’s emphasis on financial inclusion. This represents a tremendous opportunity for Arohan Financial Services.
Threats

Threats

  • Deterioration in Asset Quality: Arohan Financial Services could experience headwinds due to a lack of operational efficiency or deterioration in the quality of assets. These factors would have a direct impact on this company’s profitability.
  • Possible Degradation of Capitalisation Profile: In case Arohan Financials’s adjusted gearing increases on a sustained basis owing to the degradation of its capitalisation profile, it could pose a threat to this company.
Strenghts Strengths
Weaknesses Weaknesses
Opportunities Opportunities
Threats Threats

Strengths

  • Brand recognition: The company has a global footprint in more than 24 countries with a partnered network of over 1.5 million restaurants.
  • Business model: Zomato follows a B2C business model that connects customers to a wide network of restaurants. The company has an asset-less business model, giving it high financial leverage.
  • Marketing: Zomato follows a robustly creative marketing strategy both online and offline. Accordingly, it has a decent customer engagement and has over 11.2 million active users each month.
  • User-friendly: The Zomato app and web portal come with an easy-to-navigate UI.

Weaknesses 

  • Competition: Newer food delivery platforms with unique offerings are mushrooming now more than ever. It not only limits Zomato’s market expansion scope but also imposes a threat to its existing customer base.
  • Business model: Though Zomato’s business model is currently working in its favour, there are high chances tech developments could impose a foundational threat. If Zomato stops innovating and improving its customer service, its very successful business model could restrain its potential.

Opportunities 

  • Market expansion: Zomato is active in 25 countries. Moreover, it has not reached the saturation point yet. Therefore, given its current market momentum and growth potential, it can be expected that the food delivery service will witness upward mobility and rapid market expansion in the next couple of years.
  • Online users: The percentage of smartphones users with interest access is increasing every day. This opens up a great growth opportunity for Zomato to expand its target base and market presence.
  • Technological development: As the tech space continues to bring in newer innovations, it could open newer paths for Zomato to explore.

Threats 

  • Competition: Newer food delivery platforms with unique offerings are mushrooming now more than ever. It not only limits Zomato’s market expansion scope but also imposes a threat to its existing customer base.
  • Business model: Though Zomato’s business model is currently working in its favour, there are high chances tech developments could impose a foundational threat. If Zomato stops innovating and improving its customer service, its very successful business model could restrain its potential.

Competitive Analysis: Market Peers

Here is a tabular representation of the competition that Arohan Financial Services faces from its listed peers:

Company  Market Capitalisation Growth rate (Last 5 Years) TTM P/E Ratio  Dividend Yield 
Tata Investment Corporation 129.81% 37.97 2.08
Mannapuram Finance  160.40% 10.31 0.95
L&T Finance  5.55% 20.34  -
Equitas Holdings  -35.16%  9.39 2.30
Shriram Transport Finance 13.72% 14.68 1.32
Note that all figures are as per data available as of July 2021.

Arohan Financial Services IPO FAQs

What is Arohan Financial Services IPO?

Arohan Financial Services aims to raise funds worth Rs. 1750 crores to Rs. 1800 crores. Its initial public offering will include a fresh issue worth Rs. 850 crores and an offer for sale (OFS) of 27,055,893 shares by existing shareholders.

When is the Arohan Financial IPO listing date?

The listing date of Arohan Financial IPO is yet to be announced.

When will Arohan Financial Services IPO be open for subscription?

The IPO subscription date is yet to be announced.

How will investors receive shares?

Arohan Financial shares will be credited to your Demat account following the completion of the allotment process.

Who are the Book Running Lead Managers to this IPO?

The Book Running Lead Managers of this IPO are ICICI Securities, Edelweiss Financial Services, Nomura Financial Advisory and Securities, along with SBI Capital Markets.

Who is the registrar for Arohan Financial IPO?

The registrar to this issue is Link Intime India Private Limited.

What is the minimum lot of Arohan Financial IPO?

The lot size of this IPO is yet to be announced.

What are the different categories of investors that can participate in Arohan Financial IPO?

Retail individual investors, qualified institutional buyers, and non-institutional investors can subscribe to this IPO. The issuer has allotted a portion for eligible employees as well.

What type of issue will Arohan Financial IPO be?

Arohan Financial IPO will be a book-built type of issue.

Can I apply for the Arohan Financial IPO if I don’t have a UPI ID?

If you do not have a UPI ID, you can easily create one with any of the UPI Handles present on the NPCI list. Moreover, you can also apply for the Arohan Financial IPO with the help of the ASBA facility of your bank or with physical forms.

How can I apply for the Arohan Financial IPO through the Angel One App?

Follow these steps to apply for the Arohan Financial IPO with the Angel One app:
- Go to the ‘Investment Opportunities’ section of the App.
- Now, tap on ‘IPOs and FPOs’ and enter the required details.
- Provide the valid UPI ID as approved by NPCI.
- Finally, select the ‘Invest’ option and place your IPO order.

How to create an UPI ID?

Here’s a step-by-step guide to help you create a UPI ID through the BHIM app:
- First, download the BHIM app.
- Now, verify your mobile number and register the passcode.
- Choose your bank from the list.
- Now, the app will fetch your bank details. However, if you have more than one bank account, select the one that you wish to register on the app.
- For security, you need to set up a UPI PIN.
- Finally, check your UPI ID in the Profile section.

Where to find my UPI ID?

Usually, you can find your UPI ID in the Profile section of the app you are using. You can click here to check how to locate UPI IDs for some of the popular UPI apps.

When can I receive the UPI mandate request after I place an order?

You will get a UPI mandate request 15-20 minutes after bidding for an IPO on the app. There might be a delay sometimes.

Why can’t I apply for the Arohan Financial IPO using my UPI ID?

To apply for the Arohan Financial IPO via UPI, your UPI ID/Handle has to be approved by NPCI. So, if you can’t apply for the IPO, make sure to check the list of banks that are approved by NPCI to provide UPI service for IPO.

How can I approve my Arohan Financial IPO mandate request?

You can approve your IPO mandate request through your UPI app.

My UPI handle isn’t listed in the Angel One app while I apply for the Arohan Financial IPO. What should I do?

If your UPI handle is missing from the dropdown list on the Arohan Financial IPO page of Angel One app, it means your UPI handle is not approved by NPCI to apply for IPO. You can create another UPI ID with any of the apps/banks from the NPCI list.

Are there any charges to apply for the Arohan Financial IPO?

There are absolutely no charges to apply for the Arohan Financial IPO with Angel One.

Will I be able to submit more than one IPO applications?

You can apply for only 1 IPO application with the same PAN. If you try to apply for multiple IPO applications with your PAN through different platforms, the allotment will be cancelled.

Although I have approved the mandate request, the status on the Angel One app is still pending? What should I do?

This implies that your UPI mandate request status is not getting updated on time. However, it will reflect in the IPO order book shortly.

Within what time should I approve the UPI mandate request?

You are allowed to approve the UPI mandate request any time before 12 am of the next working day after the IPO closes. However, make sure to approve the mandate request just as you receive it.

Can I apply for the Arohan Financial IPO using a bank account that is not connected with Angel One?

Yes, you can opt for the Arohan Financial IPO application with an account that isn’t linked with Angel One app. However, it must be in the name of the investor.

Can an NRI apply for the Arohan Financial IPO through the Angel One app?

No, an NRI cannot apply with the Angel One app. But, they can apply easily with the ASBA process of the bank accounts.

Will I be able to apply for the Arohan Financial IPO with my HUF’s account?

You can apply for the Arohan Financial IPO with the HUF’s account only through the ASBA process with your bank. However, you won’t be able to apply with the same on Angel One app.

What is the cut-off price and why is it important to apply at the cut-off price?

The price at which the shares are issued to the investors during an IPO is the cut-off price. It is usually determined at the allotment stage of the IPO. Ideally, all retail investors bid at the cut-off price in order to increase their chances of allotment. When investors apply at the cut-off price, it means they would be bidding at this particular price.

Can I apply for IPO using my daughter’s account if she is a minor?

Minors are not allowed to apply for an IPO through the Angel One app. However, they can apply with the ASBA process.

Can I apply for the Arohan Financial IPO with a current account?

It is advised to apply for the Arohan Financial IPO using the savings account. This is because most banks usually do not process IPO applications that are submitted through a current account. However, you can contact your bank for more information.

My account did not get debited even after I applied for an IPO. Why so?

Your bank will hold/block the amount of money when you apply for an IPO. The amount will be debited only when the shares are allotted. In case the shares aren’t allotted, the amount will be released to your account before the UPI mandate expiry date.

Why was my Arohan Financial IPO application rejected?

Your IPO application can get rejected if you:
- Provide an incorrect UPI PIN or ID while approving the mandate request
- Enter a Demat account, UPI ID or bank account that is not linked to the same PAN
For example, if you apply for Arohan Financial IPO with your Demat account using your brother’s UPI ID, your application will get rejected. This is because your PAN is not linked with your brother’s UPI or your Demat account isn’t linked with your brother’s bank account.

How to modify my Arohan Financial IPO bid?

You can modify the UPI ID or the lot size after you have placed your order. But, you must know that if you have already approved your UPI mandate request for the order, and then modify the order, the IPO bid amount will be blocked, along with the amount blocked for the original bid. You will be receiving another UPI mandate request for the modified bid. In case you don’t approve the previous mandate request, the amount for the original bid will not be blocked.

How to guarantee Arohan Financial IPO allotment?

It’s not entirely possible to guarantee any IPO allotment. This is because when the shares are oversubscribed, IPO is allotted via a lottery system. Angel One is simply an online platform to apply for IPO. It cannot guarantee you allotments.
But there are ways in which you can increase your chances of allotment:
- Use only 1 Demat account that is linked to your PAN.
- Try to apply at the cut-off price.
- Make sure that the Demat account, UPI ID, and bank account are all linked to one PAN. If not, your application for Arohan Financial IPO can get rejected.

When will the funds get blocked or unblocked?

Your funds will be blocked just as you approve the mandate request for your Arohan Financial IPO application. However, if you do not obtain any shares during the allotment, your funds will be unblocked on or before the UPI mandate expiry date. If the fund is not unblocked post this date, you should approach your bank.

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