IPO Review – Fusion Micro Finance Limited

The Indian stock markets saw an influx of IPOs at the start of 2022, which experienced a lull as markets started to slump. However, the momentum has picked up once again as multiple IPOs are starting to grace the bourses.

The latest IPO to enter the stock markets is Fusion Micro Finance Limited. This young micro-financing company’s IPO subscription window was open from November 02 to November 04. The company plans to raise approximately Rs. 331 crores via a fresh equity issue of Rs. 600 crores and an offer for the sale of about 13 lakh equity shares.

The company provides financial services to women entrepreneurs who are economically and socially deprived. As per market news, on 5th Nov, Fusion Microfinance shares’ were commanding a GMP (grey market premium) of Rs. 12. The issue’s retail portion was subscribed 0.51 times.

Let’s have a detailed look at this IPO and review some of the pros and cons of investing in it.

Fusion Micro Finance Ltd IPO – key dates and GMP

Here are the top details of the IPO that investors should know about:

Issue open date	02 Nov 2022
Issue close date	04 Nov 2022
IPO Allotment date	10 Nov 2022
Refund and unblocking of funds	11 Nov 2022
Shares credited in Demat account	14 Nov 2022
Listing	15 Nov 2022
GMP (Grey Market Premium)	Rs. 12

IPO dates: November 02 – November 04 2022
IPO price band: Rs. 350 – Rs. 368
Bid lot: 40 shares and multiples of similar quantity
Issue size: Rs. 1,104 crores
- Fresh issue: Rs. 600 crores
- Offer for sale – Rs. 479 – 504 crores
Reservation:
- QIB – 50%,
- Retail – 35%,
- NII – 15%
Minimum investment amount: Rs. 14,000

About Fusion Micro Finance Ltd

Fusion Micro Finance is a Delhi-based micro-lending company that was established in 2010. It offers financing services to women across semi-urban and rural areas to allow them to access more employment opportunities.

Here are some of the top facts that investors should know about this company:

Fusion Micro Finance offers loans amounting up to Rs. 50,000 and adopts a group liability concept that was initiated by the Grameen Bank of Bangladesh.
The company caters to 2.12 million active borrowers from 725 locations and through its 6,351 staff in 18 states.
Between 2018 and 2021, the company saw 3rd-fastest rise in its gross loan portfolio at 44%.
As of March 31, 2021, the company was ranked among the top 10 NBFC-MFIs as far as assets under the management of the country’s youngest enterprises are concerned.
The company’s Gross NPAs have also been coming down from 5.51% in 2019 to 1.12%, in 2020 and 1.55% in 2021.

Company strengths

Some of the company’s strengths are:

The company has a technologically advanced operating model that is periodically reviewed and modified to ensure a fast-moving and dynamic business setup.
The company has a pan-India presence, with a significant presence in rural areas. 69.24% of its branches and 92.51% of its clients are located in rural areas.
It has a powerful, capable, and well-experienced management team. The company’s founder, Mr Devesh Sachdev possesses over 25 years of practical expertise.

Company weaknesses

Investors must take note of the below-mentioned drawbacks of the company:

Due to its client base, the microfinance company is subject to various risks.
There are chances of significant impact from Interest rate volatility affecting the company’s net interest income.
In case of a rise in NPAs in the future, the company’s cash flow and operations can be significantly impacted.
Due to the sizable number of the company’s branches and staff, it is also exposed to significant risks in the future.

Risks involved in Fusion Micro Finance IPO

Here are some of the top risks surrounding this company:

There are chances that the company is unable to manage its future growth effectively as historical performance trends should not be mistaken as an indication of future performance.
Any downgrading in the company’s credit rating can impact its ability to access capital for lending to borrowers.
In case of any disruption in the source of funds or the rising cost of funding can directly impact the company’s bottom line.

Conclusion

On the final day of the Fusion Micro Finance IPO, the overall issue was subscribed up to 2.95 times. For a well-informed investment decision, investors must carefully go through the points mentioned above before considering an investment in this IPO.

FAQs

1. How can I invest in Fusion Micro Finance IPO?

To invest in Fusion Micro Finance IPO, you can use your Demat account with Fisdom. If you dont have a Demat account, you can download this app today and complete a simple e-KYC to get started.

2. How do I check the allotment status of Fusion Micro Finance IPO?

To check the allotment status of Fusion Micro Finance IPO, you can visit the Fisdom app. You can also check the same on the BSE website or the website of the issue registrar.

3. Is there a guarantee of getting an allotment in Fusion Micro Finance IPO?

No, there is no guarantee of getting an allotment in any IPO since the IPO allotment happens through a draw system.

4. Can I still invest in Fusion Micro Finance if I miss the IPO allotment?

Yes, after the allotment, the company’s shares will be available publicly for trading/investing on stock exchanges. You can then buy them through any BSE or NSE registered stockbroker.

5.When is the last date for Fusion Micro Finance IPO subscription?

November 04, 2022, is when the Fusion Micro Finance IPO subscription ends.

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Rudri Rawell