The initial public offering (IPO) of Akme Fintrade India continued to see a decent response from the investors during the third and final of the bidding process. Even as the HNI and retail categories continued to bid for the issue, the muted participation from the institutional investors kept the overall bidding low on a comparative basis.
The Udaipur-based Akme Fintrade India is selling its shares in the price band of Rs 114-120 apiece. Investors can apply for a minimum of 125 and its multiples thereafter. It is looking to raise Rs 132 crore via IPO, which entirely includes a fresh share sale of 1.10 crore equity shares.
According to the data, the investors made bids for 32,41,15,625 equity shares, or 41.21 times, compared to the 78,65,000 equity shares offered for the subscription by 3.00 pm on Friday, June 21. The three-day bidding for the issue, which opened on Wednesday, June 19, concludes today.
The allocation for non-institutional investors subscribed 107.22 times, while the portion reserved for retail investors saw a subscription of 36.60 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was booked 12.33 times, while the employee portion was merely 3.36 times as of the time.
Incorporated in 1996, Akme Fintrade India is a non-banking financial company (NBFC) with over 20 years of experience in lending to rural and semi-urban areas in India. It mainly provides lending solutions tailored to the needs and aspirations of rural and semi-urban populations. Its portfolio comprises Vehicle Finance and Business Finance Products for small business owners.
The grey market premium of Akme Fintrade has seen a sharp correction as institutional investors kept away from the issue. Last heard, the company was commanding a premium of Rs 30 in the unofficial market, suggesting a listing pop of about 25 per cent for the investors. However, the premium in the grey market stood around Rs 48-50 a day earlier.
Brokerage firms remain mixed on the issue, with a positive bias. Some suggest high risk appetite investors to subscribe to the issue on the back of demand for financial services and small issue size. However, others are skeptical on consistency of financial performance, high NPAs, and rich valuations of the company.
Akme Fintrade India is a well established vehicle finance, small businesses lending business with customer centric approach and deep understanding of target customers and access to diversified sources of capital and effective asset liability management along with Hub and Spoke business model that improves efficiencies and decreases costs, said Anand Rathi Research.
"At the upper price band, the company is valuing at P/E of 27.64 times, P/BV of 1.52 times with a market cap of Rs 512.1 million post issue of equity shares and return on net worth of 7.72 per cent. We believe that the IPO is fairly priced and recommend 'subscribe for long term' rating to the IPO," it said.
Akme Fintrade reported a net profit of Rs 12.25 crore with a revenue of Rs 53.45 crore for the nine month ended on December 31, 2023. The company's bottomline stood at Rs 15.80 crore with a revenue of Rs 69.57 crore for the financial year ended on March 31, 2023.
The NBFC sector in India is highly competitive, demanding strategic differentiation to maintain market share. Secondly, Akme Fintrade has faced compliance issues in the past, which further raises concerns. Additionally, the company's high NPAs and low credit rating indicate potential challenges, said Swastika Investmart.
"The IPO valuation further amplifies these concerns, appearing fully priced in the current market context. Considering these factors, we recommend a cautious approach to the Akme Fintrade India IPO," it added with a 'neutral' view. "While the Grey Market Premium (GMP) suggests some investor interest, the inherent risks outweigh the potential benefits for most investors."
Akme Fintrade raised Rs 37.61 crore from three anchor investors by allocating them 31.35 lakh equity shares at an issue price of Rs 120 apiece. It has reserved 50 per cent of the issue for the qualified institutional bidders (QIBs), while non-institutional investors have 15 per cent of the net offer. Remaining 35 per cent of the net offer shall be allocated towards retail investors.
Gretex Corporate Services is the sole book running lead manager of the Aasaan Loans IPO, while Bigshare Services is the registrar for the issue. Shares of the company shall be listed on both NSE and BSE with Wednesday, June 26 to be the tentative date of listing of shares.
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