Manba Finance Limited, a prominent non-banking finance company (NBFC-BL), is set to launch its initial public offering (IPO) from September 23, 2024, to September 25, 2024. The IPO is entirely a fresh issue of 1.26 crore equity shares, aiming to raise ₹150.84 crores. In this blog, we’ll explore the key details, objectives, and insights surrounding this IPO, including whether it's a good investment opportunity.
The Manba Finance IPO is a book-built issue with a price band set between ₹114 and ₹120 per share. The lot size is 125 shares, which means retail investors can make a minimum investment of ₹15,000, while larger investors such as sNII (Small Non-Institutional Investors) can invest in 14 lots (1,750 shares) at ₹210,000. The maximum application size for bNII (Big Non-Institutional Investors) is 67 lots (8,375 shares), amounting to ₹1,005,000.
Key timeline events include:
Hem Securities Limited is the book-running lead manager, and Link Intime India Private Ltd is the registrar for the IPO.
Established in 1998, Manba Finance Limited provides financial solutions primarily for two-wheelers (2Ws), three-wheelers (3Ws), electric two-wheelers (EV2Ws), and electric three-wheelers (EV3Ws). The company also extends loans for used cars, small businesses, and personal loans. With branches spread across urban, semi-urban, and rural areas, Manba Finance has built strong relationships with over 1,100 vehicle dealers, including 190 EV dealers in major states like Maharashtra, Gujarat, Rajasthan, and others.
The company primarily targets two customer groups: employees and self-employed individuals, offering customized financing solutions for their specific needs. Typically, Manba Finance funds up to 85% of the vehicle's on-road price.
As of March 31, 2024, Manba Finance employs 1,344 people, signifying its steady growth and operational scale.
Manba Finance has shown robust financial growth in recent years:
The company’s financial health is further evident in its return on equity (ROE) of 21.36%, a debt-to-equity ratio of 3.75, and a return on net worth (RoNW) of 15.66%. The price-to-book value (P/BV) ratio stands at 2.25, indicating the stock is priced fairly considering the company’s book value.
The primary objective of the IPO is to augment the company’s capital base to meet future financial requirements. With the increasing demand for electric vehicles and personalized financial solutions, the proceeds from this IPO will allow Manba Finance to enhance its lending capabilities and expand its market reach.
The promoters of Manba Finance include Manba Investments and Securities Private Limited, Avalon Advisory and Consultant Services Private Limited, Manba Fincorp Private Limited, and Manba Infotech LLP, along with Manish Kiritkumar Shah (HUF).
Before the IPO, the promoters hold 100% of the company’s shares. However, post-issue, this shareholding will dilute, although exact post-issue figures are yet to be disclosed.
As of March 31, 2024, the market capitalization of Manba Finance IPO is estimated at ₹602.87 crore. Here’s a quick look at some of the key metrics:
These metrics indicate that while the issue seems reasonably priced based on pre-IPO earnings, post-IPO the valuation might look slightly stretched. However, the company’s consistent revenue and profit growth provide confidence to investors for long-term returns.
According to financial analysts like Dilip Davda, Manba Finance is a leading financier in the two-wheeler and three-wheeler market and has successfully diversified its offerings. The company has exhibited steady growth in both revenue and profitability over the years, making it a strong contender in its niche market.
However, the IPO pricing appears to be on the higher side, given the post-issue P/E ratio of 19.19x. For long-term investors, this IPO could be a good opportunity, especially with the company's stronghold in the EV financing segment. If you’re looking for immediate returns, this may not be the best bet, but for those willing to park funds for the long haul, Manba Finance offers potential for steady growth.
Manba Finance IPO offers investors a chance to participate in the growing vehicle financing market, especially with the EV revolution in full swing. With its solid financial track record and strategic focus on personalized lending solutions, the company is well-positioned for future growth. That said, investors should weigh the fully-priced nature of the IPO against its long-term growth prospects before making a decision.
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