Muthoot Microfin IPO: Latest Subscriptions, GMP; Should You Subscribe For Long Term?

Leading micro-loans services provider, Muthoot Microfin continued to witness robust demand from non-institutional and retail investors even on the second day of the public offer. The IPO has fully subscribed by 1.97x. However, there has been dull demand from qualified institutional buyers so far. Subscriptions in the IPO will continue till December 20.

Muthoot Microfin launched its Rs 960 crore worth IPO on December 18 and will close on December 20th. Tuesday is the second day of its subscription.

As per the NSE data, at around 2.21 pm, the IPO received bids of 4,81,44,357 equity shares, against the offered size of Rs 2,43,87,447 equity shares, registering an oversubscription of 1.97 times.

The portion reserved for retail investors oversubscribed by 3.18x, while the non-institutional investors portion also saw a full subscription of 1.76x. However, qualified institutional buyers have continued to show a tepid appetite for the IPO even on the second day.

The total IPO included a fresh issue worth Rs 760 crore and an offer for sale of up to Rs 200 crore. The 100% book building has a price band of Rs 277 to Rs 291 per share. The bid lot size is 51 Equity Shares and in multiples thereof.

On Tuesday, as per Investor Grain, in the grey market, Muthoot Microfin IPO's last GMP was Rs 50, last updated Dec 19th 2023 02:30 PM. With a price band of 291.00, Muthoot Microfin IPO's estimated listing price is ₹341 (cap price + today's GMP). The expected percentage gain/loss per share is 17.18%.

Is it worth subscribing to this IPO?

In its IPO note, Geojit said, "At the upper price band of Rs.291, MML is available at a P/B of 1.9x (FY24E annualised), which appears to be reasonably priced. Going forward, the microfinance industry will continue to exhibit strong growth on the back of the government's continued focus on strengthening the rural financial ecosystem, robust credit demand, and higher-ticket loans disbursed by microfinance lenders. Based on its diversified lending products, focus on digital transformation, and expanding geographical footprint, we assign a "Subscribe" rating for MML on a medium- to long-term basis."

Along similar lines, Anand Rathi in its note said, "The company has a market leadership with a pan India presence. Also, the company is a part of the prestigious Muthoot Pappachan group. At the upper price band company is valued at P/BV of 2.2X with a market cap of Rs 49,608 million post issue of equity shares. We believe that valuations of the company is fairly priced and recommend a "Subscribe-Long Term" rating to the IPO."

Muthoot Microfin is a microfinance institution promoted by the Muthoot Pappachan Group, specializes in providing micro-loans to women customers, primarily for income generation in rural areas of India. As of March 31, 2023, MML ranks as the 5th largest NBFC-MFI in India based on its gross loan portfolio. Additionally, it holds the position as the 3rd largest NBFC-MFI in South India by gross loan portfolio and is the leading microfinance institution in Kerala with the highest market share.

MML is also a significant player in Tamil Nadu, holding an almost 16% market share. The company serves 0.32 cr active customers through 1,340 branches across 339 districts in 18 states and union territories in India, as of September 30, 2023.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.