Spandana Sphoorty sees tepid debut, lists at 4% discount to issue price

Shares of microfinance lender Spandana Sphoorty Financial made a weak debut at the bourses on Monday. The stock got listed at Rs 825 apiece on the NSE, a discount of 3.62 per cent to the issue price of Rs 856. On BSE, the scrip got listed at Rs 824 apiece and ended the day at Rs 848.4 levels.

The company's Rs 1,200 crore initial public offering (IPO), which was opened for subscription between August 5 and 7, was subscribed 1.05 times. The category reserved for qualified institutional buyers (QIBs) was subscribed 3.10 times while non institutional investors' quota was subscribed 56 per cent. Retail individual investors' category was subscribed 9 per cent. 

The IPO comprised fresh issue of Rs 400 crore and an offer for sale of 93,56,725 shares including anchor portion of 42,08,886 shares. The price band of the offer was fixed at Rs 853-856 per share.

The net proceeds from the fresh issue will be utilised towards augmenting the company's capital base to meet future requirements and for general corporate purposes, the company had said. 

Axis Capital, ICICI Securities, IIFL Securities, JM Financial, IndusInd Bank and YES Securities India were the manager to the offer.

As per reports, during FY19 (over FY18-19), the net interest income, pre-provisioning profit and net profit of the company grew at a robust pace of 87.5 per cent to Rs 640 crore, 109.8 per cent to Rs 519 crore and 66 per cent to Rs 312 crore, respectively.

Analysts at Centrum Broking had suggested investors to subscribe to the IPO from a long-term perspective. 

"At upper end of the price band, Spandana Sphoorty (SSFL) is valued at 2.7x of FY2019 BV (Pre-IPO) and on post dilution basis at 2.4x of Book value, whereas close peers i.e. CreditAccess Grameen is trading at 3x FY2019 BV. Given SSFL’s successful exit from Corporate Debt Restructuring (CDR) in March 2017, healthy net interest margin (NIM), return ratio and low penetration of financial services in rural India coupled with a well-capitalised balance sheet and experienced management; we believe the company has an excellent base for next level of growth. Based on the positive factors, we assign SUBSCRIBE rating to the issue," Angel Broking had said in an IPO note. 

Eventually, the stock settled at Rs 854.75 apiece, up 3.61 per cent.