Mehta Equities has come out with its report on Spandana Sphoorty Financial. The research firm has recommended to "Subscribe'' the IPO in its research report as on August 5, 2019
Hyderabad based Spandana Sphoorty Financial Ltd (SSF) is a two decade old geographically diversified and rural focused NBFC Microfinance Institution (MFI). SSF is the fourth largest MFI in India and 6th largest across globe in terms of AUM. It is engaged in offering small-ticket unsecured loans to help the women in the low-income bracket in rural and urban areas.Valuation and Outlook
We believe Spandana Sphoorty Financial Ltd (SSF) IPO provides good scope of growth as well as a favourable investment opportunity in MFI space for long term investors. Microfinance industry has exhibited impressive business growth over the past few years and company with a clear focus on women rural customers whose access to the formal banking sector is limited would witness healthy growth going forward which act as the main catalyst for long term investment at Rs. 856, SSF commands Rs 5505 Cr market cap with P/E of 17x on its FY19 earnings with AUM of Rs. 4,437 Crore (FY19). On valuation parse at higher price band SSF trades at 2.91x P/BV multiples post issue which seems average when compared other listed MFI peers. Considering women focused business targeting to low income group, the selfemployed, daily wage category and first-time borrowers, which acts as key factor of growth going forward. Hence, we believe investors can tap this IPO offer as a next long term investment idea in microfinance space and recommend investors to “SUBSCRIBE” to the issue for long term basis only.
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