The initial public offering (IPO) of Manba Finance continued to see strong response from the investors during the second day of the bidding process, thanks to all-round demand. The issue, which kicked-off for bidding on Monday, September 23, ended the first day with nearly 24 times subscription.
Mumbai-based Manba Finance is selling its shares in the price band of Rs 114-120 apiece. Investors can apply for a minimum of 125 shares and its multiples thereafter. It is looking to raise Rs 150.84 crore via IPO, which is entirely a fresh share sale of 1,25,70,000 equity shares.
According to the data, the investors made bids for 40,67,16,875 equity shares, or 46.22 times, compared to the 87,99,000 equity shares offered for the subscription by 1 pm on Tuesday, September 24. The three-day bidding for the issue will conclude on Wednesday, September 25.
The allocation for non-institutional investors (NIIs) was subscribed 92.94 times, while the portion reserved for retail investors saw a subscription of 50.14 times. However, the quota set aside for qualified institutional bidders (QIBs) quota saw bids for 3.06 times for their allocations as of the time.
Established in 1998, Manba Finance is a non-banking finance company (NBFC) offering financial solutions for new two-wheelers (2Ws), three-wheelers (3Ws), electric two-wheelers (EV2Ws), electric three-wheelers (EV3Ws), used cars, small business loans and personal loans.
The grey market premium of Manba Finance has inched higher amid the rising trend in the broader markets and solid bidding on day one. Last heard, the company was commanding a premium of Rs 64-65 in the unofficial market, suggesting a listing pop of about 54 per cent for the investors.
Brokerage firms, largely have a positive view on the issue and suggest subscribing to it on the back of strong financials, rising demand of loans and proposed expansion of the business. However, rising cost of capital and increased bad loans are the key concerns for the company.
Manba Finance is valued at P/B of 1.7 times on FY24 BVPS at the upper price band, on a post issue basis. The issue is reasonably priced with room for upside. Its NII, Total Income, PPoP, PAT and AUM has grown at a CAGR of 35.1 per cent, 35.2 per cent, 48.7 per cent, 79.6 per cent and 37.5 per cent, respectively. over FY22-24, said Indsec Research.
"We have a 'subscribe' rating on the company on account of the company's strong relationship with dealers for vehicle financing; foray into diversified products & geographies in order to mitigate concentration risk; and improving asset quality & diversified funding mix," it added.
Manba Finance has reserved 50 per cent of the shares for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) have a reservation of 15 per cent of the equity shares. Retail investors have a reservation of 35 per cent portion allocated to them in the IPO.
Manba Finance is set to list at a P/B of 1.72 times with a market cap of Rs 602.87 crore, whereas its peers are richly priced, said Marwadi Financial Services. "We assign 'subscribe' rating to this IPO as the company has the ability to expand to new underpenetrated geographies. Also, it is available at reasonable valuation as compared to its peers," it said.
Hem Securities is the sole book running lead manager of the Manba Finance IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Monday, September 30 as the tentative date of listing on the bourses.