SBFC Finance Shares Debut At 44% Premium Over IPO Price

The lender started it’s first day of trading with the shares listed at Rs 82 apiece on the NSE and Rs 81.99 apiece on the BSE, against the issue price of Rs 57 per share in the IPO.

Market experts stated that the lender's pan-India presence, comprehensive credit assessment, underwriting, risk management framework, and strong return ratios add to the company’s strength.

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SBFC Finance debuted in the stock market with a premium of 44 per cent on Wednesday. The lender started it’s first day of trading with the shares listed at Rs 82 apiece on the National Stock Exchange (NSE) and Rs 81.99 apiece on the BSE, against the issue price of Rs 57 per share in the IPO.

A day prior to the listing, the company’s shares were trading at a premium of Rs 26 per share in the grey market. The IPO worth Rs 1,025 crore received a strong response from the investors and was oversubscribed by more than 70 times. The IPO was listed in the range of Rs 54-57 per share, with a total lot size of 260 shares between August 3 to 7, reported Economic Times. 

Amongst the bidders, qualified institutional bidders subscribed the IPO 192 times, while the non-institutional investors subscribed about 49 times. The retail investors bid for the IPO nearly 11 times. The company has stated that proceeds from the fresh issue worth Rs 600 crore will be utilised to help strengthen the lender’s capital base to be able to meet future capital requirements.

Market experts noted that the lender’s major strengths include it’s pan-India presence, comprehensive credit assessment, underwriting and risk management framework, the report cited. Additionally, the lower cost of funds and strong return ratios add to the company’s strength.

Axis Capital, ICICI Securities, and Kotak Mahindra Capital Company were the book-running lead managers for the IPO. While the registrar for the offer was KFin Technologies.

The company reported a revenue of Rs 740 crore and a profit of Rs 149.7 crore for the year ending March 2023. SBFC Finance is a non-deposit-taking, non-banking financial entity. It provides loans to small and medium-scale enterprises, entrepreneurs, self-employed individuals, and salaried, working professionals. It also provides gold loans. The company has about 152 branches, spread across 120 cities in the country. MSME loans comprise the majority of the lender's business, followed by gold loans.

(Disclaimer: This report is meant only for information purposes. It should not be treated as a stock recommendation. Reader discretion advised.)