SBFC Finance Limited IPO

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Did you know that 7 crore MSMEs create 30% of India’s GDP and generate employment for nearly 11 crore people in the country? SBFC is a new-age financial services company that has been serving micro, small and medium-sized businesses since 2008. Its IPO will be open for subscription on August 3, 2023.
sbfc finance limited ipo

IPO details

SBFC Finance IPO is a book-built issue that opens on the 3rd of August and closes on the 7th August. Here are all the important details of this IPO that you need to know:

IPO Open DateAugust 3, 2023
IPO Close DateAugust 7, 2023
Face ValueRs. 10 per share
Price BandRs. 54 to Rs. 57 per share
Lot Size260 shares
Total Issue SizeAggregates up to Rs. 1,025 crore
Fresh IssueAggregates up to Rs.  600 crore
Offer for SaleAggregates up to Rs. 425 crore
Employee DiscountRs. 2 per share
Issue TypeBook Built Issue IPO
Listing atNSE and BSE
Share-holding Pre-issue958,908,906

Apply for the SBFC Finance IPO via Bajaj Broking.

About the company 

SBFC Finance Limited was formed with a simple idea— provide MSMEs with easy access to credit. If our country is to reach its true potential, having this service is essential.

SBFC is a new-age financial institution, headquartered in Mumbai that offers various financing opportunities for micro, small and medium-sized enterprises in India. It is registered as a non-deposit-taking NBFC (non-banking financial company). Its main two products are secured MSME loans and gold loans.

SBFC Finance reimagines lending with innovative approaches, for example, the ‘PhyGital’ model which combines digital technology and personal relationships to create a loan for customers—a loan which would serve them well at the right moment.

SBFC Finance Limited serves customers throughout the country and has a strong network in many Tier 1 and Tier 2 cities. The NBFC has around 137 branches across 105 cities across India serving over 95,000 customers.

IPO tentative timeline

To subscribe to the SBFC Finance IPO, you must put in your bids between 3 and 7 August during market opening hours. You will need to have a demat account and sufficient funds in your bank account to apply for an IPO.

Check the tentative timeline for SBFC Finance Limited IPO:

IPO Open Date3 August 2023, Thursday
IPO Close Date7 August 2023, Monday
Basis of Allotment10 August 2023, Thursday
Initiation of Refunds11 August 2023, Friday
Credit of Shares to Demat accounts14 August 2023, Monday
Listing Date16 August 2023, Wednesday
Cut-off time for confirmation of UPI mandateAugust 7, 2023; 5 P.M

IPO lot size

As a retail investor, you will need to put in a bid for at least one lot, i.e. 260 shares worth Rs. 14,820. Here are the details of minimum and maximum lot sizes for different investors:

ApplicationLotsSharesAmount
Retail (Min)1260Rs. 14,820
Retail (Max)133380Rs. 1,92,660
S-HNI (Min)143640Rs. 2,07,480
S-HNI (Max)6717,420Rs. 9,92,940
B-HNI (Min)6817,680Rs. 1,007,760

Company financials

In FY2022-23, the company witnessed steady growth and improvement in its credit quality. The total income of SBFC Finance grew 39% from FY 2022 to Rs. 7404 million while profit after tax grew to Rs. 1497 million from Rs. 645 million in FY22.

Here are the key financials of the company for the past three financial years:

ParticularsFor the financial year ending (in Rs. million)
 March 31, 2022March 31, 2021March 31, 2020 
Total Assets45,150.3442,311.9042,079.85
Total Liabilities32,278.6730,260.8231,955.08
Total Expenses4,440.063,974.683,862.34
Total Revenue5,307.025,115.334,448.46
Profit After Tax645.21850.10354.95
EBITDA3,190.943,620.613,108.31

Strengths

Let’s check the competitive strengths of SBFC Finance Limited:

  1. Diversified pan India presence

SBFC Finance Limited has strategised its expansion to cater to small business owners, entrepreneurs, self-employed individuals, and salaried and working-class individuals throughout India. With a footprint in 105 cities across 16 states, it has built a strong customer base. As of December 2022, it has 137 branches.

The presence of branches across India reduces concentration risk which is a significant advantage against its peers. The company has invested in high-quality infrastructure and personnel while setting up its branch offices.

  • 100% in-house sourcing

100% of the company’s loan portfolio comes from in-house sourcing. As a result, SBFC Finance doesn’t have to rely on direct selling agents for understanding the profiles of customers. The company has adopted a direct sourcing model through branch-led local marketing efforts which has benefitted it greatly. It has helped to cement the relationship with customers.

  • Comprehensive credit assessment and risk management framework

SBFC Finance Limited has a proper credit assessment and risk management framework in place to identify, track and manage risks in its operations. It focuses on small business owners whose monthly income is Rs. 0.15 million and who have, previously, serviced gold loans, two-wheeler loans, etc. By focusing on customers who have a better income profile, SBFC achieved a stable growth trajectory.

Good risk management is critical for a financial services company as it helps it maintain financial stability. This maximises its long-term growth potential which makes the company desirable for investors like you.

  • Robust asset quality

SBFC has built an extensive on-grounds collection infrastructure to maintain high asset quality. Its branches, which serve a limited radius, have been filled by local hires. So, the branch staff can attend to a customer’s needs quickly. There’s a three-tier collection infrastructure—tele-calling, field collection and legal recovery—which helps in optimum collections.

  • Healthy liability franchise with low cost of funds

The ability to access diverse funding sources is one of the key contributors to the growth of SBFC. The company intends to diversify its funding sources, identify new sources of capital and expand its net interest margin.

SBFC has received an A+ credit rating from ICRA which indicates its resilience despite the challenges faced by the Indian economy. Its co-origination agreement with ICICI Limited has helped it to extend priority sector loans and maintain a smooth flow of funds.

  • Consistent financial performance backed by profitable growth

SBFC’s financial reports show steady financial performance and profitable growth. The company has taken initiatives to reduce its concentration risk across industries and sectors. So, you won’t find any particular industry contributing more than 10% to their loan portfolio. While its secured loan portfolio has undergone an increase, its quality loan portfolio is securitised regularly. This reduces operational risks.

The loan against the gold portfolio of SBFC helps with the total yield profile and lends additional growth levers. It also acts as a hedge against the cyclic movements of the Indian lending industry caused by various factors.

There’s another point you need to take into consideration when looking at the company’s financial strength. SBFC offers loan management services to third-party financial institutions. It is also a backup service provider for a leading global bank.

  • Professional management team with good corporate governance

SBFC has a good management team with experienced and dedicated professionals. The senior management has a good combination of both management executives and independent members. Their business experience has helped the company make optimum use of growth opportunities.

The knowledge and experience of the heads of functional groups such as risk, operations, finance, audit and collections have enhanced the overall management quality.

Risks involved

Every equity investment comes with some risks. Here are some of the risks related to the business of SBFC Finance Limited that you should be aware of:

  • Repayment failure may adversely affect their business

If customers fail to repay their loans, it will reduce SBFC’s cashflow. Their risk management and monitoring systems may not be sufficient to counter future losses because of customer defaults. This would increase its gross NPAs and have an adverse impact on the overall business.

  • Misleading information may affect SBFC’s judgement of collateral value

If the information provided by customers and third-party service providers turns out to be false, it will heavily impact SBFC’s judgement of its creditworthiness. This is because the financial company relies, to a great extent, on the accuracy of information furnished by its customers.

While SBFC conducts a credit check for all its customers, it cannot provide a guarantee that credit information will always be accurately available.

  • Portfolio quality may be affected by high levels of NPAs

SBFC cannot assure that it will always maintain its NPA ratios at favourable levels concerning the credit performance of its customers. The company can also face greater defaults with respect to principal and/or interest repayments in the future.

Moreover, if SBFC’s provisioning coverage is not sufficient to cover the levels of NPAs, the company’s prospects may be adversely affected.

  • Disruption in capital flow can adversely affect business

The company’s ability to raise funds on favourable terms and conditions depends on several factors such as results of operations, credit ratings and risk management policies. It also depends on brand equity, regulatory environment, policy initiatives and developments in both domestic and international markets.

If SBFC Finance is unable to acquire funds in time, the company’s financial condition and results of operations will be negatively affected.

Summary

SBFC Finance Limited IPO will be open for subscription on August 3, 2023, and close on August 7, 2023. It is expected to get listed on both NSE and BSE. Given above are the company overview, financials, risks and strengths of the company; you should check these details to make an informed decision.

If you are interested in this IPO, should do your due diligence and check the strength and weaknesses before investing. You can also take the help of an investment expert to safely invest in its IPO.

 

 

 

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SEBI study dated January 25, 2023 on “Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment”, wherein Aggregate Level findings are based on annual Profit/Loss incurred by individual traders in equity F&O during FY 2021-22.

BROKERAGE DISCLAIMER

All leveraged intraday positions will be squared off on the same day. There is no restriction on the withdrawal of the unutilised margin amount. Brokerage will not exceed the SEBI prescribed limit. Visit : https://www.bajajbroking.in/pricing

MTF 

As subject to the provisions of SEBI Circular CIR/MRD/DP/54/2017 dated June 13, 2017, and the terms and conditions mentioned in the lights and obligations statement issued by the TM (if applicable).  

US INVESTING

International investment is not supervised by any regulatory body in India. Thus, any claim or dispute relating to such investment or enforcement of any agreement/contract /claim will not be under laws and regulations of the recognized stock exchanges and investor protection under Indian Securities Law. The account opening process will be carried out on Vested platform and Bajaj Financial Securities Limited will not have any role in it.  

PICKRIGHT / MARKETSMITH / GOLDENPI / SOVEREIGN GOLD BONDS

Bajaj Financial Securities Limited is only distributor of this product. These are not exchange traded products and all disputes with respect to the distribution activity, would not have access to exchange investor redressal forum or Arbitration mechanism. Bajaj Financial Securities Limited is not a registered Investment Advisory. User discretion is required before investing. Client is requested to independently evaluate and/or consult their professional advisors before arriving at any conclusion to make any investment. The decision to invest shall be the sole responsibility of the Client and shall not hold Bajaj Financial Securities Limited, its employees and associates responsible for any losses, damages of any type whatsoever. 

IPO 

This should not be construed as soliciting investment. Investors’ discretion is required. Kindly consult your financial expert before investing. No need to issue cheques by investors while subscribing to IPO. Investments in securities markets are subject to market risks, read all the related documents carefully before investing.  

IPO FINANCING

IPO Financing is done through Bajaj Finance Limited. Bajaj Finance Limited (BFL or Lender) reserves the sole right to decide participation in any IPO and financing to the client shall be subject to credit assessment done by the lender. Also, BFL shall have full rights to decide the commercial terms for IPO and final application and financing shall be subject to all requirements being met by the client in a timely manner including documentation, account setup and payment of required Interest and Margin. Bajaj Finance Limited also reserves the exclusive rights to change any of the above-mentioned terms and conditions without prior notice to clients. The scheme margin is subject to change. UPI is mandatory to bid in all IPOs through our platform. As per exchange guidelines, all the UPI mandates will only be accepted till 5:00 PM on IPO closure day. 

SCREENERS 

Screeners is not Exchange-approved products and any disputes related to the same will not be dealt on the Exchange platform. 

SECURITIES 

Securities quoted are exemplary and not recommendatory. 

IPV 

Account would be open after all procedure relating to IPV and client due diligence is completed. 

IMAGES 

The images used are only for representation purpose. Proper due diligence has been done for the images and the image is not of any artist. The same is captured from royalty free sites. 

DISCLOSURE TO CLIENTS REGARDING PAYOUT OF FUNDS

As per SEBI circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/84 dated June 08, 2023, Stockbrokers are required to upstream the entire client funds lying with them to the Clearing Corporation. Based on client’s request the funds’ release request must be placed with the Clearing Corporation. Based on the internal process and cut-off timelines of the Clearing Corporation the funds will be released to the Stock Broker. In view of this new process, as specified by the regulatory and the cut-off time of Clearing Corporation/Banks processing the funds, Bajaj Financial Securities Limited cannot commit the exact time for releasing funds payout to its client. Clients are requested to note that, Bajaj Financial Securities Limited will not be responsible for any inconvenience caused to clients due to delay in release of funds payout, including fines, delayed charges, defaults, etc.