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Things you need to know about the IBL Finance IPO
In 2017, IBL Finance Ltd was established as a fintech-driven financial services platform, embracing the modern era. The business uses data science and technology to make lending quick, simple, and effective. The foundation of the business is the idea that inflexible and ineffective procedures in traditional lending methods can keep out those most in need. IBL Finance has significantly streamlined the lending process with an emphasis on meeting the individual needs of borrowers.
This guarantees that the worthy receive financing and that the borrower will have an excellent borrowing experience. Operating primarily via a mobile application, it provides a fully digital process. Small-ticket personal loans, for example, can be transferred into your bank account in less than five minutes. A loan does not require physical availability, and the majority of the laborious paperwork is eliminated. During the lending process, the business uses fairly sophisticated algorithms that use big data and machine intelligence to reach reasonable and practical decisions.
IBL Finance Ltd has disbursed over 1,65,000 personal loans totaling more than ₹7,200 lakhs as of this writing. More than 5 lakh apps have already been downloaded, and 3,81,156 logins were made to its IBL Instant Personal Loan app in the most recent year. Over 28,000 users were using the app on average each month. The company has been in business for seven years and has eight branches in the states of Maharashtra and Gujarat.
The company uses advanced underwriting algorithms that leverage over 500 data points to generate a comprehensive credit report, even though many of these algorithms are proprietary. The benefit is that because of their point of presence in other data points, even semi-urban and rural residents can still obtain loans even in the absence of the necessary paperwork and audit paper trail. At the moment, it employs more than 81 people full-time.
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Important details of the IBL Finance IPO
These are a few of the highlights from the IBL Finance IPO (Initial Public Offering) on the National Stock Exchange’s (NSE) SME division.
- Subscriptions for the issue are accepted starting on January 9, 2024, and ending on January 11, 2024, inclusive.
- The company is a fixed price issue with a face value of ₹10 per share. For the IPO, ₹51 per share has been set as the fixed issue price. There is no question of price discovery in this instance because it is a fixed price issue.
- There is no offer for sale (OFS) component to IBL Finance IPO; it is solely a fresh issue component. It is important to keep in mind that while the fresh issue portion is EPS and equity dilutive, OFS is not since it is merely a transfer of ownership.
- IBL Finance Ltd. will issue 67,25,000 shares (67.25 lakh shares) in total as part of the fresh portion of the IPO. At the fixed IPO price of ₹51 per share, this will result in a fresh fundraising of ₹34.30 crore.
- The fresh issue size will likewise double the total IPO size because there isn’t an offer for sale (OFS) component. Therefore, the issue of 67,25,000 shares (67.25 lakh shares) will also be included in the overall IPO size. At the upper IPO band price of ₹51 per share, this will result in an overall IPO size of ₹34.30 crore.
- This issue includes a market-making section with a market-maker inventory allocation, just like any other SME IPO. Both the market maker’s name and the number of shares for the inventor are still up for debate. To guarantee low basis costs after listing and liquidity on the counter, the market maker will offer two-way quotes.
- Manish Patel, Piyush Patel, and Mansukh Patel have all promoted the business. Currently, 85.55% of the company is owned by the promoter. Nevertheless, the promoter equity holding share will be diluted to 62.45% following the new share issuance in the IPO.
- The company intends to use the proceeds from the new issue to increase its Tier-1 capital, which is a prerequisite for growing its lending book. A portion of the funds raised will also be used to cover the company’s general operating costs.
- The issue’s lead manager will be Fedex Securities Private Ltd, and its registrar will be Link Intime India Private Ltd. The issue’s market maker has not yet been formally disclosed.
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Allocation and minimum lot size for investment for IBL Finance IPO
Though IBL Finance Ltd. has not yet disclosed the amount to market makers, most SME initial public offerings (IPOs) typically see an allocation of between 5% and 6%. The company has not yet disclosed the identity of the market maker. The retail investors and HNI/NII investors will split the net offer (net of market maker allocation) equally. The table below shows the distribution of IBL Finance Ltd’s entire initial public offering (IPO) across the different categories.
| Market Maker Shares | Approximately 5% of the total issue size |
| QIB Shares Offered | No specific allocation to QIBs |
| NII (HNI) Shares Offered | 50% of the net offer size (net of market maker quota) |
| Retail Shares Offered | 50% of the net offer size (net of market maker quota) |
| Total Shares Offered | 67,25,000 shares (100.00% of total issue size) |
For the IPO investment, a minimum lot size of 2,000 shares will be required. Retail investors can therefore participate in the IPO for a minimum of ₹102,000 (2,000 x ₹51 per share). Additionally, it is the maximum amount that regular investors may contribute to the IPO. Investors who qualify as HNIs or NIIs must invest a minimum of two lots, each consisting of four thousand shares, with a minimum lot value of ₹204,000. Both QIBs and HNI/NII investors have no upper limit on what they can apply for. The breakdown of lot sizes for each category is shown in the table below.
| Application | Lots | Shares | Amount |
| Retail (Min) | 1 | 2,000 | ₹1,02,000 |
| Retail (Max) | 1 | 2,000 | ₹1,02,000 |
| HNI (Min) | 2 | 4,000 | ₹2,04,000 |
Important dates for the IBL Finance IPO
IBL Finance IPO is scheduled to begin on Tuesday, January 9, 2024, and end on Thursday, January 11, 2024. The IBL Finance Ltd. initial public offering (IPO) bid period runs from January 9, 2024, at 10:00 AM, to January 11, 2024, at 5:00 PM. The deadline for confirming the UPI mandate is 5 PM on January 11, 2024, the day the issue closes.
| Event | Tentative Date |
| IPO Opening Date | 09th January 2024 |
| IPO Closing Date | 11th January 2024 |
| Finalization of Basis of Allotment | 12th January 2024 |
| Initiation of Refunds to non-allottees | 15th January 2024 |
| Credit of Shares to Demat account of eligible investors | 15th January 2024 |
| Date of listing on the NSE-SME IPO segment | 16th January 2024 |
It should be mentioned that there is no concept of a refund in ASBA applications. Under the ASBA (applications supported by blocked amounts) system, the entire application amount is blocked. After the allotment is finalized, the bank account is automatically released from the lien on the remaining amount, and only the amount that was allotted is debited. Investors will be able to see the shares credited to the Demat account on January 15, 2024, under the ISIN code (INE0O7401018).
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Financial highlights of IBL Finance Ltd
The most important financial data for IBL Finance Ltd. over the last three fiscal years is shown in the table below.
| Particulars | FY23 | FY22 | FY21 |
| Net Revenues (₹ in crore) | 13.33 | 3.27 | 1.13 |
| Sales Growth (%) | 307.65% | 189.38% | |
| Profit after Tax (₹ in crore) | 1.93 | 0.43 | -0.10 |
| PAT Margins (%) | 14.48% | 13.15% | -8.85% |
| Total Equity (₹ in crore) | 20.49 | 3.56 | 3.13 |
| Total Assets (₹ in crore) | 22.18 | 10.23 | 3.39 |
| Return on Equity (%) | 9.42% | 12.08% | -3.19% |
| Return on Assets (%) | 8.70% | 4.20% | -2.95% |
| Asset Turnover Ratio (X) | 0.60 | 0.32 | 0.33 |
These are some important conclusions drawn from the company’s last three years’ worth of financial data.
- The past two years have seen a very significant increase in revenues, so the company may not find much value in the earlier growth periods. This is a result of the growth starting from a very low base. Additionally, the business has only turned a profit in the last two years.
- Because of the increase in sales over the last two years, net margins have been extremely strong at 14%; however, the return on equity was also rather low in the most recent year. ROA shows the same trend, though the numbers from the most recent year might be the most important.
- Due to its capital-intensive nature, the asset turnover ratio is consistently below 1. Nonetheless, it still appears acceptable when the perspiration and ROA are combined. But since this is a spread business, the NIMs might be the most important metrics.
The company’s weighted average EPS over the previous three years was ₹0.66, with its most recent year’s EPS of ₹1.15. In any case, even when you take into account the latest year’s EPS at 44.4 times P/E discounting, the valuations appear to be fairly high. Given that many of the valuation assumptions rely on the company’s ability to sustain this rate of growth going forward, investors should exercise caution given the recent year’s sharp spike in revenues. The investor must consider whether its business model can truly be scaled up as well as whether profits are sustainable. It’s still a very risky move.
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