SBFC-Finance-Limited-IPO
The MSME sector is one of the most fragmented segments in our country yet it is often considered to be the Indian economy’s backbone. One of the many challenges faced by this sector is the ability to get the required timely finances. This is where NBFCs or Non-Banking Financial Companies come into picture, many of which are dedicated to catering to the MSME segment. One such leading NBFC in India is SBFC Finance Limited. The company’s IPO opens on 3rd August, 2023 and offers investors an opportunity to be part of the MSME NBFC growth story.
SBFC Finance Limited IPO will open for subscription from 3rd August 2023 to 7th August 2023.
Let’s take a look at all the important details of SBFC Finance Limited IPO, including issue price, allotment date, grey market premium (GMP), opportunities and risks of investing in this IPO, etc.
The key details of SBFC Finance Limited are as under.
The size of the IPO and different categories of the issue are:
| Category | Details |
| IPO Opening Date | 3rd August 2023 |
| IPO Closing Date | 7th August 2023 |
| Listing | NSE, BSE |
| Issue Type | Book Built Issue IPO |
| Face Value of shares | Re. 10 per share |
| IPO Price Band | Rs. 54 – Rs. 57 per share |
| IPO Size | Rs. 1,025 crores |
| Offer for Sale | Rs. 425 crores |
| Fresh Issue | Rs. 600 crores |
The important dates for SBFC Finance Limited IPO are highlighted below:
| Event | Date |
| Opening date | 3rd August 2023 |
| Closing Date | 7th August 2023 |
| Allotment date | 10th August 2023 |
| Refund Date | 11th August 2023 |
| Share Credit Date | 14th August 2023 |
| Listing Date | 16th August 2023 |
Investors can subscribe to SBFC Finance Limited shares in pre-defined lots. The details of the lot sizes for this IPO are mentioned below:
| Category | Details |
| Investments in lots | Minimum – 1 lot Maximum – 13 lots |
| Investment amount | Minimum – Rs. 14,040 – 14,820 Maximum – Rs. 1,92,660 |
| Shares | Minimum – 260 Maximum – 3380 |
Here’s the summary of reservation for different applicant categories in this IPO:
| Category of Investor | Reservation Percentage |
| Retail Individual Investors | 35% |
| QIB (Qualified Institutional Buyers) | 50% |
| NII (Non-Institutional Bidders) | 15% |
This IPO is a combination of an Offer for Sale and a Fresh Issue. The proceeds from the issue will be utilised towards augmenting the company’s capital base and meeting their capital requirements in the future that will arise out of the growth of the business and assets.
Founded in 2008, SBFC Finance Limited is a significant Non-Banking Finance Company (NBFC-ND-SI), designated as systemically important and non-deposit-taking. Its core clientele comprises self-employed individuals, salaried workers, small business owners, and entrepreneurs. SBFC specialises in offering Secured MSME Loans and Loans against Gold.
The company aims to cater to entrepreneurs and small business owners who often face limited options for financial support from traditional banking institutions. Various factors are taken into account when providing loans to ensure that SBFC Finance assists its customers in meeting their financial needs and achieving success.
With a widespread presence across India, SBFC Finance has a well-established network in more than 105 cities, covering 16 Indian states and two union territories. As of December 31, 2022, SBFC Finance has successfully served its diverse customer base and continues to support them in their financial endeavours through a network of 137 branches facilitating their reach and accessibility.
SBFC Finance Limited’s financials are given in the table below:
| Year | Total Assets (Rs. in cr) | Total Revenue (Rs. in cr) | Profit after Tax (Rs. in cr) | Basic EPS | Return on Net Worth |
| Mar-2023 | 5,746 | 732 | 150 | Rs.1.71 | 9.93% |
| Mar-2022 | 4,515 | 529 | 64 | Rs.0.81 | 5.18% |
| Mar-2021 | 4,231 | 507 | 85 | Rs.1.09 | 7.67% |
(Source: RHP)
Some of the key strengths of SBFC Finance Limited IPO that investors can take note of are
| Category | Details |
| Business model | The company has 100% in-house sourcing leading to favourable business outcomes and a diversified pan-India extensive network to cater the target customer segment They also have consistent financial performance, healthy liability franchise with low-cost of funds and is backed by a profitable growth of their business. |
| Other merits | They have an extensive on-ground collections infrastructure leading to maintenance of asset quality as well as comprehensive credit assessment, underwriting, and risk management framework. |
Here are some of the risks that investors of SBFC Finance Limited IPO should know:
| Category | Details |
| Business viability and profitability | The company has substantial capital requirements and any breakdown in this segment will adversely affect the business. The business faces the risk of NPAs, non-payment, or default by borrowers |
| Other concerns | The company operates in a fragmented segment and faces fierce competition from small and large players. The industry is also subject to political, economic, regulatory, or other factors which can adversely affect its business. |
As of July 31st, 2023, the grey market premium for the shares of SBFC Finance Limited IPO is Rs. 38 as per market observers. This means the shares are expected to list at a premium of Rs. 38 per share over the listing cap price of Rs. 57.
Lately, the Indian MSME sector has seen substantial support from the government as well as the financial sector. However, this segment’s performance is somewhat marred by the surge in NPAs (Non-performing assets) and RBI’s right monetary policies. Investors must carefully study the company’s performance, weigh the business’s pros and cons and do a due diligence before investing in this IPO.
Investors can invest in this IPO through the Fisdom app.
The net interest margin of SBFC Finance Limited for the years ending Mar 2021 is 11.73%, for the year ending March 2022 is 9.39% and for the year ending March 2023 is 9.32%.
The core business segment of SBFC Finance Limited is entrepreneurs, small business owners, self-employed individuals, and salaried and working-class individuals.
The QIB reservation in the SBFC Finance IPO is 50%.
SBFC Finance has a robust presence in 105 cities across 16 states in India, along with two union territories. The company’s extensive network comprises 137 branches, effectively reaching out to its customer base in these regions.
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