Manba Finance IPO , a Maharashtra-based NBFC, opened its maiden public offering on Monday. The IPO started off well, attracting lots of interest from investors as it was subscribed 23.79 times on the very first day of bidding by investors. At this level, it is reflecting great demand and positive market sentiment toward the stock of the company. It will be open for subscription until Wednesday, September 25, 2024.
Table of Contents
Company Background
Manba Finance operates many financial services that aim to reach an extensive customer market that holds many needs. The financial services include auto loans, used car loans, small business loans, and personal loans. So far, it has been able to build its base in six Indian states-that include Maharashtra, Gujarat, Rajasthan, Chhattisgarh, Madhya Pradesh, and Uttar Pradesh-and covers 66 locations already.
Manba Finance offers credit to the people and small businesses who generally face difficulties in securing money from banks in the usual financial sector. The company is proud of its approachability and flexibility with a customer-centricity attitude that has brought it steady growth in this highly competitive financial service industry.
There was tremendous demand for IPO on the first day itself.
The day one of Manba Finance’s IPO was replete with exceptional demand by the investors. As per the data obtained from the National Stock Exchange, the issue was subscribed 23.79 times by the end of the first day. In simple number terms, this means the IPO received bids on a staggering 20.92 crore shares compared to the 87.99 lakh shares that were made available in the offer.
Now, let’s see the Breakup of Subscriptions.
Broken down further into constituent numbers, notable responses were from the NII category. This group includes high net worth individuals and companies subscribing to the issue 43.18 times as a testament to their confidence in the growth possibilities and business prospects of Manba Finance.
Even the QIBs, including mutual funds, banks, and insurance companies, were very keen on the issue as their share of the issue was subscribed 2.36 times. Participation by QIBs typically reflects if an IPO has been successful or not since these investors are obviously endowed with deep research and are considered market players sophisticated by any definition.
Retail individual investors also accounted for a substantial percentage of the IPO, which was subscribed 27.71 times. This reflects a high order intake from the retail segment that indicates increasing interest of individual investors in the stock market, especially in the finance industry.
GMP of Manba Finance IPO
The grey market premium (GMP) of Manba Finance IPO also speaks volumes on how hot the stock is. Currently, it’s trading at a GMP of around ₹64. That means, in the unlisted market, the investors are ready to pay ₹64 more than the issue price for every share, meaning a premium of more than 53%.
GMP, in general, is an informal measure that takes into account market sentiment and probable demand for a stock once it is listed on the exchange. Not always predictive, but a high GMP usually reads a confirmation of interested investors and will thereby attract a much higher listing price than anticipated.
Estimated Listing Price
Based on investorgain source, the shares of Manba Finance would list at around ₹184. This will be a good upside from the IPO price range, pegged at ₹114 to ₹120 per share. Listing at ₹184, in case it happens, will mean a premium of about ₹64 per share, matching the grey market premium.
Change in GMP: Grey Market Premium has been changing in the run up to the IPO. The lowest GMP quoted on Manba Finance’s IPO was recorded at ₹0 while the highest was ₹64. It clearly shows that how the market sentiments change when the IPO date is approaching.
What is Grey Market Premium?
Now, before entering all the IPO details, let’s understand what grey market premium or GMP is. GMP represents the amount of premium that investors are willing to pay for shares of an IPO before they are listed on the stock exchange. Shares in the grey market which operates outside of the official market sell at a premium or discount based upon demand.
It is not a regulated market, but due to its unofficial operation, it is sometimes taken as a barometer by investors to judge the probability of success of an IPO. When a high GMP is indicated, then that means there is a high demand for the shares in the formal market and vice versa, in case of a low or negative GMP.
IPO Details of Manba Finance
Manba Finance has fixed the price band between ₹114 and ₹120 per equity share with a face value of ₹10 per equity share. The company will raise an aggregate sum of ₹150.84 crore in the IPO by selling up to 1.26 crore shares in fresh issue.
The entire 100 percent stake in the company is held by the promoters of Manba Finance at present. But post the issuance of IPO, due to acquisition of share from new investors, this stake of promoters gets diluted. Generally, the amount raised in an IPO is majorly used to enhance the capital base of a company. Such capitals shall be available to the company to support its future lending operations and let it grow its loan book to meet the increasing demand for its services.
The funds acquired will be applied towards general corporate purposes, which may include working capital, infrastructural requirements, technology, and any other that will benefit the operations of the company.
Growth Prospects and Future Prospects for Business
Manba Finance operates in an industry that has great growth potential. Demand for financial services all over India has been exponentially mounting in recent times, especially in undiscovered regions where it could not be strong enough in the face of traditional banks. The NBFCs such as Manba Finance are playing a huge role in filling up that gap by offering accessible and flexible credit options to the people and small businesses in the area.
This includes the auto loan market, which is now projected to grow with increasing disposable incomes, urbanization, and demand for personal vehicles in the near future. The used car loan market is also witnessing increasing popularity with consumers opting more for affordable pre-owned cars. Consequently, Manba Finance derives significant benefit from all these trends by virtue of its presence in several states and a variety of loan products.
Small business loans and personal loans are also strong growth drivers. With an increasing number of small and medium-scale enterprises looking for credit to expand their activities, the services of NBFCs like Manba Finance are only bound to find more demand. Personal loans continue to be high in demand by consumers for funding various requirements, whether health, education, or improvements in the house.
Competitive Landscape
While Manba Finance operates in a sector with strong growth prospects, it also has to compete with other NBFCs as well as traditional banks. The financial services industry in India is highly competitive, ranging from large national banks to smaller regional NBFCs. Manba Finance will need to build on its core customer service, competitive interest rates, and expanding the geographic footprint in order to be competitive.
Technology is also being increasingly inducted into the financial services sector. Most NBFCs are going in for electronic platforms to reduce further the time taken in processing loans, thereby increasing the customer experience and reducing overheads related to operations. It will be one of the key determinants for Manba Finance for its future success-by how much it can harness technology and digital tools.
Conclusion
The heavy demand of an IPO of Manba Finance with a subscription rate of 23.79 times on the first very day reflects the sound market position that the company has and its growth possibilities. Manba Finance is well positioned to reap the growing demand for credit in India, as it has a wide range of financial products, strategic presence in multiple states, and plans to increase its capital base.
The grey market premium of ₹64 reflects the optimism of the investors towards the prospects of the company. With an estimated listing price of ₹184, those who may be able to get shares at the IPO price will stand a good chance to see some returns. At the end of the subscription period, people will eagerly look for the final outcome of the IPO and see what happens to the shares when they are exposed to the stock market.