IPO Snapshot
Usha Financial Services Limited, a well-established non-banking finance company (NBFC), has launched its IPO, seeking to raise ₹98.45 crores through a fresh issue of 5.86 million shares. This IPO is book-built and is open for subscription from October 24, 2024, to October 28, 2024, with a listing planned on NSE SME on October 31, 2024.
IPO Details
| Particulars | Details |
|---|---|
| IPO Date | October 24, 2024 to October 28, 2024 |
| Listing Date | October 31, 2024 |
| Face Value | ₹10 per share |
| Price Band | ₹160 to ₹168 per share |
| Lot Size | 800 Shares |
| Total Issue Size | 5,860,000 shares (₹98.45 Cr) |
| Fresh Issue | 5,860,000 shares (₹98.45 Cr) |
| Issue Type | Book Built Issue IPO |
| Listing At | NSE SME |
| Shareholding Pre-Issue | 15,877,631 shares |
| Shareholding Post-Issue | 21,737,631 shares |
| Market Maker Portion | 320,800 shares |
About Usha Financial Services Limited
Incorporated in 1995, Usha Financial Services Limited focuses on providing lending solutions to NBFCs, corporates, MSMEs, and individuals, with a particular emphasis on empowering women entrepreneurs. They also offer green financing for electric vehicles (EVs), a sector gaining momentum in India. The company’s AUM stands at ₹30,695.76 Lakhs, with a strong net worth of ₹10,602.63 Lakhs and a CRAR of 33.03%, indicating a stable financial position. The debt-to-equity (D/E) ratio of 1.71 suggests manageable leverage levels.
Key Evaluation Factors for Investors
When evaluating IPOs like Usha Financial Services, investors typically focus on multiple aspects to assess the potential for returns and associated risks. Below are the main points investors should consider:
- Business Model & Industry Positioning
- Clarity of Business Model: Usha Financial Services has a well-defined revenue model, focusing on retail and wholesale lending, which contributes to a diversified risk profile.
- Industry Growth Potential: As an NBFC with green financing offerings, Usha is well-positioned to benefit from growth trends in financial services and electric vehicle financing.
- Competitive Advantage: The company’s strategic agreements and extensive network enhance its lending capabilities, especially within the retail segment.
- Financial Health & Performance
- Revenue Growth: Between FY 2023 and FY 2024, revenue increased by 38%, and PAT rose by 32%, indicating robust financial performance.
- Profit Margins: Usha Financial’s growing profit margin reflects effective cost control, signaling potential profitability.
- Debt Levels: With a D/E ratio of 1.71, the company’s debt levels are considered manageable within industry norms.
- Cash Flow: Positive cash flows would mean resilience, ensuring sustainability in operations and growth.
- Valuation
- Pricing: With a price band of ₹160 to ₹168 per share, investors should compare Usha’s pricing with other similar companies.
- P/E and P/B Ratios: Examining these ratios alongside industry standards can help assess the attractiveness of this IPO.
- Use of IPO Proceeds
- Growth-Oriented Allocation: The IPO proceeds are aimed at expanding operations, which could lead to revenue growth rather than merely addressing debt repayment.
- Management Team
- Experience: Usha Financial Services has an experienced management team, enhancing confidence in strategic execution.
- Corporate Governance: Sound corporate governance practices are indicative of the company’s commitment to transparency and responsible management.
- Market Conditions & Sector Sentiment
- Peer Comparison: Assessing Usha alongside its listed NBFC peers can provide insights into its relative value proposition.
- Sector Trends: As NBFCs gain traction in lending, especially in underserved segments, Usha could benefit from this trend.
- Lock-in Period for Promoters and Investors
- Promoter Lock-in: The promoter lock-in period offers insight into the promoters’ commitment to long-term business growth.
- Anchor Investor Participation: Reputed anchor investors can boost confidence in the IPO’s stability.
- Risks and Challenges
- Sector-Specific Risks: Changes in NBFC regulations or economic downturns may impact Usha’s operations.
- Client/Market Concentration: Heavy dependence on select clients or geographic regions could pose revenue risks.
- Operational Risks: Dependence on key personnel or supply chain stability are important factors for long-term stability.
- Underwriter and Market Maker Quality
- Reputation of the Lead Manager: A credible underwriter lends assurance to investors regarding the IPO’s viability.
- Market Maker Involvement: Adequate liquidity post-listing is crucial, and a capable market maker is a positive factor.
- Future Growth Plans
- Expansion Strategy: Plans for EV financing and further penetration into MSME lending indicate growth potential.
- Innovation and R&D: Focus on green financing and expansion into newer financial solutions align with evolving market demands.
Usha Financial Services IPO Investment Insights
Usha Financial Services’ diversified lending portfolio, strong financial growth, and strategic focus on underserved segments offer a solid foundation for potential investors. The company’s EV financing expansion is a forward-looking initiative in a growing sector, which could appeal to investors focused on green financing.
However, as with any investment, potential risks should be weighed, particularly regulatory changes or economic shifts that could impact the NBFC sector. By examining these factors, investors can better gauge Usha Financial’s growth potential and risk profile, ultimately making an informed decision about participating in the IPO.
Usha Financial Services IPO FAQs
1. When does the Usha Financial Services IPO open and close for subscription?The Usha Financial Services IPO opens for subscription on October 24, 2024, and closes on October 28, 2024.
2. What is the listing date for Usha Financial Services IPO?The Usha Financial Services IPO is scheduled to list on the NSE SME on October 31, 2024.
3. What is the face value of shares in Usha Financial Services IPO?The face value of each share in the Usha Financial Services IPO is ₹10 per share.
4. What is the price band set for Usha Financial Services IPO?The price band for the Usha Financial Services IPO is set between ₹160 to ₹168 per share.
5. How many shares are available in one lot for Usha Financial Services IPO?The minimum lot size for the Usha Financial Services IPO is 800 shares.
6. What is the total issue size for Usha Financial Services IPO?The Usha Financial Services IPO has a total issue size of 5,860,000 shares, aggregating up to ₹98.45 crore.
7. Is Usha Financial Services IPO a fresh issue or an offer for sale?The Usha Financial Services IPO is entirely a fresh issue of 5,860,000 shares (aggregating up to ₹98.45 crore).
8. On which exchange will Usha Financial Services IPO be listed?Usha Financial Services IPO will be listed on the NSE SME exchange.
9. What is the pre-issue shareholding of Usha Financial Services?Before the IPO, the shareholding of Usha Financial Services is 15,877,631 shares.
10. What will the post-issue shareholding be for Usha Financial Services?After the IPO, the shareholding of Usha Financial Services will be 21,737,631 shares.
11. How much is the market maker portion for Usha Financial Services IPO?The market maker portion for Usha Financial Services IPO is 320,800 shares.
12. What is the minimum amount required for retail investors to invest in Usha Financial Services IPO?The minimum investment amount required by retail investors for Usha Financial Services IPO is ₹134,400 for one lot of 800 shares.
13. What is the minimum investment required for HNI investors in Usha Financial Services IPO?For HNI investors, the minimum investment in Usha Financial Services IPO is ₹268,800 for 1,600 shares (2 lots).
14. What type of issue is Usha Financial Services IPO?The Usha Financial Services IPO is a Book Built Issue IPO.
15. What is the share price range for applying in Usha Financial Services IPO?The share price for applying in the Usha Financial Services IPO ranges from ₹160 to ₹168 per share.
Disclaimer: The information provided in this blog is for informational purposes only and should not be considered as investment advice. Readers are advised to perform their own research and consult with financial experts before making any investment decisions. Please note that BajajCapitalAdvisor has not been involved in any capacity with Usha Financial Services Limited regarding the processing of Usha Financial Services IPO. The details provided are based on publicly available information at the time of writing.
