Muthoot Microfin IPO Review – GMP, Details, Pricing & More

Muthoot Microfin IPO Review: India has been experiencing continued growth, especially in rural areas, which has driven the growth of the microfinance industry. One such company in this sector is Muthoot Microfin Limited, a subsidiary of Muthoot Pappachan Group.

The company plans for its IPO to open for subscription on December 18, 2023 and close on December 20, 2023. In this article, we look at the Muthoot Microfin IPO review and analyze its strengths, weaknesses, financials, and GMP. Read on to find out!

Muthoot Microfin IPO – About Us

Established in April 1992, Muthoot Microfin Limited is a subsidiary of Muthoot Pappachan Group. The company specializes in providing microloans to female customers, with a particular focus on rural India.

The company’s loan products consist of:

• These are group loans for livelihood solutions such as income generation loans, personal loans, and Pragati loans.
• Quality-of-life solutions include loans for solar lights, mobile phones, and home appliances.
• Health and hygiene loans, including loans to improve sanitation facilities
• Secured loans in the form of gold loans and Muthoot SME loans.

The company has a branch network focused on underserved rural markets with growth potential to provide easy access to customers. Branches are connected to IT networks and are often located in commercial spaces that are easily accessible to customers.

As of FY23, the company reported 2.77 million active customers, which are served by 10,227 employees across 1,172 branches in 321 locations across 18 states and union territories in India.

Additionally, as of December 31, 2022, the company was the fourth largest NBFC-MFI in India in terms of total loan portfolio. As of December 31, 2022, it is the third largest NBFC-MFI in South India in terms of total loan portfolio, the largest in Kerala in terms of MFI market share and a prominent player in Tamil Nadu with a market share of nearly 16%. share.

Muthoot Microfin IPO Review – Industry Insights

The portfolio of joint liability groups in the microfinance industry has seen steady growth in recent years. The overall loan portfolio of the industry has grown at a compound annual growth rate (CAGR) of 21% since FY 2018 to reach approximately Rs 3.3 trillion in Q3 FY 2023.

Among the various groups of players, NBFC-MFIs have recorded the fastest growth rate. The microfinance industry is expected to continue to grow in the future due to the government’s efforts to strengthen the rural financial ecosystem, increased demand for credit, and increased large-amount loans from microfinance institutions.

Muthoot Microfin – Financial Highlights

A look at Muthoot Microfin Limited’s financials shows that its total loan portfolio has increased from ₹49,86.71 crores in March 2021 to ₹92,08.29 crores in March 2023. Expanding the total loan portfolio is a good sign because it helps. The company generates more revenue.

During fiscal year 23, the company’s total active customers reached 2.77 million. Of these, 1.01 million were new customers.

The company’s revenue increased from ₹684.16 crores in March 2021 to ₹1428.76 crores in March 2023. Revenues also increased from ₹7.05 crores in March 2021 to ₹163.88 crores in March 2023.

In terms of return, ROE is 11.06% and ROA is 2.16% as of FY23. These ratios indicate a reasonable return on shareholder capital and efficient use of the company’s assets to generate profits.

Key players in the market

Below is a list of Muthoot Microfin’s peers in the market.

• Equitas Small Finance Bank Limited
• Ujjivan Small Finance Bank Limited
• Credit Access Grameen Limited
• Spandana Sputi Financial Limited
• Bandhan Bank Limited
• Suri Sunday Salt Finance Bank
• Fusion Microfinance Limited

Company Strengths

• As of December 2022, the company has presence in PAN-India and is the fourth largest NBFC-MFI in India in terms of total loan portfolio.
• The company’s customer-centric approach and extensive rural distribution network in India enables it to offer a wide range of financial products with limited penetration.
• The company’s relationship with Muthoot Pappachan Group provides brand recall and significant marketing and operational benefits.
• The company’s loan portfolio performance has outperformed the entire Indian microfinance industry. It has a lower monthly loan-to-book ratio compared to its peers from March 2021 to December 2022.
• The company has a streamlined operating model that uses technology effectively. This allowed us to shorten the turnaround time for the loan approval and disbursement process.
• The company has a diversified funding profile that supports its liquidity management system, credit rating and brand equity.

company’s weaknesses

• The Company is exposed to interest rate risk, and interest rate volatility may have a negative impact on net interest income.
• The company derives a significant portion of its revenue from South India. Major developments in the area may have a negative impact on our business.
• A disruption in our funding sources or an increase in our cost of funding could have a negative impact on our business.
• A downgrade in a company’s credit rating may limit its access to capital and debt markets.
• Competition from other microfinance institutions, banks, financial institutions and government-sponsored social programs may adversely affect the Company’s profitability and position in the Indian microcredit lending industry.

Muthoot Microfin IPO Review – GMP

Shares of Muthoot Microfin Limited were trading at a premium of 32.65% in the gray market on December 14, 2023. The stock was lagging at Rs 386. This gives a premium of Rs 95 per share to the ceiling price of Rs 291.

Key IPO Information

promoter: Thomas John Muthoot, Thomas Muthoot, Thomas George Muthoot, Preethi John Muthoot, Remmy Thomas, Nina George and Muthoot Fincorp Limited.

Book Operations Lead Manager: ICICI Securities Limited, Axis Capital Limited, JM Financial Limited and SBI Capital Markets Limited.

Proposal registered by: KFin Technology Limited

purpose of the problem

IPO issue targets include:

• Carry out the company’s existing business activities.
• We carry out the proposed activities to be financed from the net proceeds.
• Enhancing brand image through listing

Finishing

In this article, we have looked at the details of Muthoot Microfin IPO Review 2023. Given the growth of the government-backed microfinance industry and Muthoot Microfin’s strong financials, the company’s outlook appears favorable for the future.

What do you think the future holds for your company? Applying for an IPO? Let us know in the comments below.

Written by Aaron Barth

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