
The initial public offering (IPO) of Manba Finance continued to see strong response from the investors during the third and final day of the bidding process, thanks to a stellar demand from HNI investors. The issue ended the first day with nearly 24 times subscription while it was booked over 73 times on the second day.
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 1,21,35,97,125 equity shares, or 137.92 times, compared to the 87,99,000 equity shares offered for the subscription by 1.50 pm on Wednesday, September 25. The three-day bidding for the issue, which kicked-off on September 24, concludes today.
The allocation for non-institutional investors (NIIs) was subscribed 376.15 times, while the portion reserved for retail investors saw a subscription of 106.09 times. However, the quota set aside for qualified institutional bidders (QIBs) quota saw bids for 14.96 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 dropped lower as QIBs have refrained from bidding even on the third day of the bidding so far. Last heard, the company was commanding a premium of Rs 58-60 in the unofficial market, suggesting a listing pop of about 48-50 per cent for the investors. It was around Rs 65 a day ago.
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 well-positioned for lucrative growth through strategic expansion into 66 locations across six states, leveraging a hub-and-spoke model and a strong focus on customer and dealer satisfaction, resulting in significant growth in AUM. It plans to introduce used car loans, small business loans, and personal loans further diversify the portfolio, said Arihant Capital Markets.
"With robust relationships with dealers it efficiently addresses customer needs for vehicle financing, particularly in the growing EV market, where new vehicle Loans constitute 97.90 per cent of its AUM. Additionally, diversified funding sources and a co-lending arrangement enhance financial management. We are recommending subscribe for listing gains for this issue," 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.
Being a NBFC focused on the 2W segment, Manba has managed to deliver strong performance despite a weak rural recovery post covid. Manba witnessed its GNPA peak out in FY22 at 4.9 per cent which is much lower compared to other vehicle financiers, said Nirmal Bang Securities.
"On the back of a low base and expansion in new geographies, Manba has been able to grow its AUM at 37 per cent CAGR over FY22-24 and has generated ROA/ROE of 2.3 per cent/10.1 per cent which is in line with other listed vehicle financiers, while its valuation appears attractive at FY24 P/B of 1.7 times," it said with a 'subscribe' recommendation.
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.