Muthoot Microfin IPO: 10 things to know before you invest in Rs 960-crore issue

The issue is set to open for subscription on December 18.

The public issue of Muthoot Microfin Limited is set to open for subscription on December 18. The offer consists of a fresh issue of 2.61 crore shares worth Rs 760 crore and an offer-for-sale of 0.69 crore shares worth Rs 200 crore. The anchor book of the offer is set to open on December 15 for a day.

Here are 10 key things to know before subscribing to the offer:

1. IPO Dates

The IPO will open for subscription on December 18, 2023, and close on December 20, 2023.

2. Price Band

The price band for the issue has been fixed at Rs 277-291 per share.

3. Offer Details

The company plans to raise Rs 960 crore from the IPO. The offer consists of 2.61 crore shares and an offer-for-sale of 0.69 crore shares by the existing shareholders, including investor Greater Pacific Capital WIV, which will sell off shares worth Rs 50 crore. The remaining shares worth Rs 150 crore will be sold by promoters Thomas John Muthoot, Thomas Muthoot, Thomas George Muthoot, Preethi John Muthoot, Remmy Thomas, and Nina George.

Greater Pacific Capital-based Muthoot Microfin has reserved Rs 10 crore worth of shares for its employees who will get those shares at a discount of Rs 14 per share to the final issue price.

4. Objectives of the Issue

The company aims to use the proceeds towards augmenting the capital base to meet its future capital requirements, which are expected to arise out of the growth of Muthoot Microfin's business and assets.

5. Lot Size

Investors can bid for a minimum of 51 equity shares and multiples of 51 after that. Hence the minimum investment by retail investors would be Rs 14,127 (51 (lot size) x 277 (lower price band). At the upper band, the bidding amount will increase to Rs 14,841.

6. Company Profile

The organisation provides micro-loans to women customers with a focus on rural regions in the country. Founded in 1992, it is a subsidiary of the Muthoot Pappachan Group.

7. Financials

The Kochi-based microfinance institution has recorded a 246 percent on-year growth in net profit at Rs 163.9 crore for the year ended March FY23 and revenue during the same period increased by 71.6 percent to Rs 1,428.8 crore. Its profit after tax for six months ended September FY24 increased 16.5-fold to Rs 205.2 crore compared to the year-ago period, while net interest income during the same period jumped 65.6 percent.

8. Lead Managers

ICICI Securities Limited, Axis Capital Limited, Jm Financial Limited and SBI Capital Markets Limited are the book running lead managers of the Muthoot Microfin IPO, while Kfin Technologies Limited is the registrar for the issue.

9. Risks

(i) The microfinance industry in India faces certain risks due to the category of customers that it services, which are not generally associated with other forms of lending. As a result, they may experience increased levels of non-performing assets and related provisions and write-offs that may adversely affect their business, financial condition and results of operations.

(ii) The lender derives a significant portion of revenues from South India, and any adverse developments in the southern states of India may hurt the business, results of operations, financial condition and cash flows.

(iii) The company's business is vulnerable to interest rate risk, and volatility could hurt net interest income and net interest margin, thereby affecting Muthoot's results of operations.

10. Listing Date

The Muthoot Microfin IPO will be listed on the BSE and the NSE with a tentative listing date fixed as December 26, 2023.