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SBFC Finance (SBFC) made a strong debut, with shares of the non banking finance company (NBFC) listed at Rs 82, a 44 per cent premium over its issue price of Rs 57 per share on the National Stock Exchange (NSE) on Wednesday. The stock started trade at Rs 81.99 on the BSE.
Post listing, the stock moved higher to Rs 89.50, a 57 per cent gain over its issue price on the BSE. A combined 78.16 million equity shares changed hands on the NSE and BSE till 10:04 AM.
SBFC’s IPO received huge response with issue subscribed 74 times. The institutional investor portion of the IPO was subscribed 203.61 times, high networth individual portion 51.82 times and retail portion nearly 12 times.
SBFC is a systemically important, non-deposit taking NBFC offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals.
Among MSME-focused NBFCs in India, it has one of the highest assets under management (AUM) growth, at a CAGR of 44 per cent in the period - financial year 2019 to financial year 2023. It also witnessed healthy disbursement growth, at a CAGR of 40 per cent between fiscal 2021 and fiscal 2023.
As of March 31, 2023, approximately 89.49 per cent of their Secured MSME Loan collections and 90.92 per cent of the unsecured loan collections were non-cash-based EMI collections, thus reducing their cash management risk, and enabling customers to receive real-time payment receipts through SMS.
SBFC is a proxy play on secured business loans to self-employed individuals which is one of the fastest growing segments in lending. With a loan book of just Rs 4,415 crore as on FY23, the runway for accelerated growth is huge. Owing to SBFC’s focus on low ticket size (Rs 10 lakh in MSME) and self employed segment; its business is a difficult one to establish and execute, especially with regards to the underwriting capabilities for this segment which acts as durable competitive advantage and thus SBFC faces low competition, according to Nirmal Bang Securities.
