Muthoot Microfin IPO Review IPO entails to raise ₹960.00 Cr. Muthoot Microfin’s IPO is a combination of fresh issue of 26.1 million shares, aggregating to Rs 760 crore, and offer for sale for 6.9 million shares worth Rs 200 crore. Muthoot Microfin Ltd is the microfinance arm of Muthoot Pappachan
| IPO opens | December 18, 2023 |
| IPO Closes | December 20, 2023 |
| IPO Size (Rs.) | ₹960.00 Cr |
| IPO Size (shares) | 24,340,771 shares |
| Breakup | Fresh issue ₹760.00 Cr+ OFS ₹200.00 Cr |
| Face Value: | ₹10/- |
| IPO Price in Rs : | ₹277 to ₹291 |
| Minimum Lot | 51 Shares |
| Listing At | NSE , BSE |
| Anchor & QIB Quota | 50% |
| NII Quota | 15% |
| Retail Quota | 35% |
| Lead Manager | Axis Capital, ICICI Securities, JM Financial, SBI Capital Markers |
| Registrar | Kfin Technologies |
About Muthoot Microfin:
- .Muthoot Microfin Ltd, a microfinance institution promoted by the Muthoot Pappachan Group.
- It specialises in providing micro-loans to women customers, primarily for income generation in rural areas of India.
- As of September 30, 2023, company’s gross loan portfolio amounted to ₹10,867.07 crore.
- Their business model helps in driving financial inclusion, as they serve customers who belong to low-income groups.
- As of September 30, 2023, they have 0.32 crore active customers, who are serviced by 12,297 employees across 1,340 branches in 339 districts in 18 states and union territories in India..
- To expand their digital collections infrastructure, they launched a proprietary application, called “Mahila Mitra”, which facilitates digital payment methods such as QR codes, websites, SMS-based links and voice-based payment.
- They have offered digital healthcare facilities to the customers through “e-clinics”.
- For this they have collaborated with M-Swasth Solutions Pvt Ltd, to set up e-clinics across their branches. A
- As of September 30, 2023, they have set up 460 e-clinics across 460 of their branches, representing 34.33% of the total branches..
Financials: Muthoot Microfin
| Particulars / Rs. crore | 2023(06) | 2022(06) | 2023(12) | 2022(12) | 2021(12) |
| Revenue from operations | 1,042.33 | 604.74 | 1,428.76 | 832.51 | 684.17 |
| Revenue Growth (%) | 72.36% | – | 71.62% | 21.68% | – |
| EBITDA as stated | 706.39 | 255.05 | 788.49 | 425.66 | 327.22 |
| Profit before Tax | 274.61 | 16.76 | 212.87 | 64.72 | 9.06 |
| Net Profit for the period | 205.26 | 12.47 | 163.89 | 47.40 | 7.05 |
| Share Capital | 140.20 | 140.20 | 140.20 | 133.33 | 114.17 |
| Reserves | 1,701.90 | 1,306.39 | 1,485.65 | 1,203.25 | 775.72 |
| Net Worth as stated | 1,842.10 | 1,446.58 | 1,625.85 | 1,336.58 | 889.89 |
| EPS – Diluted (₹) | 14.22 | 0.91 | 11.98 | 3.97 | 0.62 |
| RONW (%) | 11.14% | 0.86% | 10.08% | 3.55% | 0.79% |
| Net Asset Value- Basic (₹) | 127.61 | 100.21 | 112.63 | 97.74 | 77.94 |
| Post issue Share Capital | 170.47 | ||||
| FV | 10.0 | ||||
| IPO price | 291.0 | ||||
| EPS Fy23 | 9.6 | ||||
| PE Fy23 | 30.3 | ||||
| EPS Fy24 (annualized) | 24.1 | ||||
| PE Fy24 (annualized) | 12.1 | ||||
| Market cap in Lacs | 4,960.7 | ||||
| Market cap / Sales | 3.47 | ||||
| P/BV (before IPO) | 2.28 | ||||
| P/ adj BV (after IPO) | 2.00 |
Anchor: Muthoot Microfin IPO:
Muthoot Finance Ltd | 10.5% |
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ICICI Prudential Life Insurance | 7.7% |
HDFC Life Insurance | 7.7% |
Bajaj Allianz Life Insurance Company | 7.7% |
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ACM Global Funds VCC | 5.3% |
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SBI General Insurance | 3.7% |
Florida Retirement System Fund | 3.5% |
Astorne Capital VCC – Arven | 3.5% |
Morgan Stanley Singapore ODI | 3.5% |
Muthoot Microfin IPO: Salient Points
- The microfinance industry’s gross loan portfolio increased at a compounded annual growth rate of 21% from 2018 to reach ₹3.3 trillion in the 3rd quarter of the financial year 2023.
- The IPO constitutes 19.35% of the post-IPO paid-up capital of the company.
- In 2021, Muthoot Microfin secured $50 million (about Rs 375 crore) funding from Greater Pacific Capital to fuel its growth.
- The investor Greater Pacific is now trimming its stake from 19% to 15%.
- Muthoot Microfin further enjoys support by marquee investors, Creation Investments India LLC, and Greater Pacific Capital WIV Ltd. They collectively hold 28 per cent of the equity share capital of the company on a fully diluted basis.
- Muthoot Microfin is the leading microfinance institution with the highest market share in Kerala.
- As of September 30, 2023, their gross loan portfolio in hree states of Kerala, Karnataka, and Tamil Nadu, together accounted for 51.36 % of gross loan portfolio.
- It has been expanding into North, East, and West parts of the country.
- The net proceeds of the fresh equity shares issue to augment its Tier-I capital base, its capital adequacy will enhance and lead to a stable leverage position.
- Company’s credit rating is likely to improve. This will reduce its cost of borrowings, thereby improving NIMs.
- Company’s net interest margin expanded by 200 bps Y-o-Y to 11.6 per cent for FY23.
- Its asset quality has improved significantly with net NPAs declining to 0.60 per cent from 1.42 per cent.
- Peers:
| Company | Price/Adj BV | Net NPA % | NIM % HY24 | PE (TTM) | AUM in cr. | AUM Growth % | RoA % HY24 | Roe % HY24 |
| Muthoot Microfin | 2 | 0.33 | 12.4 | 13.9 | 10867 | 46 | 3.3 | 13.7 |
| CreditAccess Grameen | 4.9 | 0.24 | 13.1 | 23.2 | 22488 | 36 | 5.1 | 20.8 |
| Fusion Micro Finance | 2.4 | 0.65 | 11 | 12.9 | 10026 | 25 | 4.6 | 18 |
| Spandana Sphoorty Financial | 2.3 | 0.42 | 13 | 17.8 | 9784 | 69 | 3.8 | 12.5 |
| Satin Creditcare | 1.4 | 1.89 | 12.8 | 7 | 8894 | 39 | 3.8 | 18.5 |
- As of March 31, 2023, MML ranked as the fifth largest NBFC-MFI in India based on its gross loan portfolio.
- It ranked as third largest NBFC-MFI in South India by gross loan portfolio.
- It has a rural focused operations, with a commitment towards health and social welfare of the customers with concepts like digital healthcare facilities to the customers through “e-clinics”
- Muthoot Microfin IPO is coming at a PE ratio of 30.3x (FY23) and 12.1x (FY24 annualized).
- The issue is priced at a P/BV of 1.91 based on its post-IPO NAV of Rs. 152.64 per share.
- GMP as reported on social media is Rs. 50.
- I intend to apply in Muthoot Microfin IPO. May have a moderate listing but in view it offers a degree of safety. Its AUM doubled in past 30 months time period while asset quality has seen improvement.
- Please do your own diligence.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.