Laxmi India Finance IPO subscribed 88% on Day 2, GMP declines: Should you apply?

Laxmi India Finance IPO

The initial public offer of Laxmi India Finance had ben subscribed 88 percent on its second day of public bidding (July 30). Retail investors took the lead, fully booking the portion reserved for them.

The Rs 254 crore maiden public issue of the company received bids for nearly 1 crore shares, as against the offer size of 1.13 crore shares, according to data on Investorgain. Non Institutional Investors (NII) have booked 52 percent of their reserved portion, while that kept for Qualified Institutional Buyers (QIBs) has been subscribed 45 percent.

Laxmi India Finance IPO GMP:

The grey market premium (GMP) continued to decline on the second day of public bidding. The unlisted shares of the company were trading with a GMP of nearly 2 percent over the IPO price at Rs 161 apiece, according to data in Investorgain. This is lower than the 11 percent GMP cited by the site earlier last week.

Laxmi India Finance on July 28 said it has mopped up a little over Rs 75 crore from anchor investors.

Laxmi India Finance, a non-deposit-taking NBFC, offers a diverse product portfolio, including MSME (micro, small and medium enterprises) loans, vehicle loans, construction loans, and other lending solutions to customers.

Should you apply?

Bajaj Broking said the investors should look at the IPO from a long-term perspective.

Bajaj Broking said the NBFC's strengths are strong access to a diverse range of capital sources, enabling the company to maintain an efficient and competitive cost of funds and robust credit assessment, underwriting, and risk management frameworks that ensure sound lending decisions and mitigate credit risks effectively.

However, Bajaj Broking sees concentration risk and asset quality risk for the NBFC.

"About 81% of Laxmi India Finance’s revenue comes from its MSME loan portfolio. While this focus is a strength, it exposes the company to risks if the MSME sector faces downturns, adverse policies, or increased competition, potentially impacting financial performance disproportionately," said Bajaj Broking.

"Laxmi India Finance primarily lends against collateral (98.81%), but the MSME and certain vehicle loan segments have shown market stress. Rising delinquencies in unsecured MSME loans and two- and three-wheeler loans by competitors highlight potential vulnerabilities. Economic downturns or localized distress could affect borrower repayment and collateral value," added Bajaj Broking.

The Jaipur-based company's IPO is a combination of fresh issue of 1.84 crore equity shares and an offer for sale of 56.38 lakh shares by promoters. Overall, the IPO size is pegged at Rs 254.26 crore at the upper end of the price band.

Proceeds from the fresh issue will be used to shore up its capital base to meet future capital requirements towards onward lending and for general corporate purposes.

As of March 2025, the company's assets under management (AUM) increased to Rs 1,277 crore from Rs 687 crore as of March 2023, representing a CAGR (compound annual growth rate) of over 36%, primarily driven by an increase in volume of its loans and strengthened branch network.

Its operational network spans across 158 branches in rural, semi-urban and urban areas in Rajasthan, Gujarat, Madhya Pradesh, Chhattisgarh, and Uttar Pradesh as of March 2025.

The NBFC player's revenue from operations increased 42% to Rs 246 crore in FY25 against Rs 173 crore in the preceding fiscal year, while its profit after tax rose 60% to Rs 36 crore compared to Rs 22.5 crore during the period.

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