Fusion Micro Finance Limited IPO

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i. Fusion Micro Finance was founded with the core idea of creating opportunities at the bottom of the pyramid, and they do so by providing financial services to unserved and underserved women in rural and peri-rural areas across India. The company believes network and services have improved accessibility to formal credit at affordable prices, thereby positively impacting the lives of its customers in rural India, and they were one of the youngest companies (in terms of getting an NBFC-MFI licence) among the top NBFC-MFIs in India in terms of AUM as of June 30, 2022

ii. As a result, the company has achieved a significant footprint across India, where they have extended its reach to 2.90 million active borrowers which were served through its network of 966 branches and 9,262 permanent employees spread across 377 districts in 19 states and union territories in India, as of June 30, 2022.

iii. As of June 30, 2022, the share of AUM from customers in rural areas represented 91.37% of its total AUM. Their main focus customer segment is women in rural areas with an annual household income of up to ₹300,000.

iv. Fusion Micro Finance’s key product offerings are income-generating loans that provide capital for women entrepreneurs in rural areas to fund businesses operating in the agriculture-allied and agriculture, manufacturing and production, trade and retail, and services sectors

Competitive Strengths:

  • Well Diversified and Extensive Pan-India Presence.
  • Proven Execution Capabilities with Strong Rural Focus.
  • Access to Diversified Sources of Capital and Effective Asset Liability Management.

Objects of the Fusion Micro Finance Limited IPO:

The issue comprises OFS and Fresh Issue. Net Proceeds from Fresh Issue will be used in: 1. Augment the capital base of the Company.

Fusion Micro Finance Limited IPO Details:

Open Date: Nov 02 2022
Close Date: Nov 04 2022
Total Shares: 29,891,304
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue
Issue Size: 1103.99 Cr.
Lot Size: 40 Shares
Issue Price: ₹ 350-368 Per Equity Share
Listing At: NSE,BSE
Listing Date: Nov 15 2022

Promoters And Management:

Devesh Sachdev is the Managing Director and CEO of the Company. He completed his post-graduate certificate in Logistics and Supply Chain Management from XLRI, Jamshedpur and completed the HBS Accion Program on Strategic Leadership in Inclusive Finance from Harvard Business School, USA. He has over 26 years of experience in service industry sector and has in the past held various positions with Citicorp Credit Services India Limited, Samarth Financial Consultancy Private Limited, BSA Logistics Private Limited. He is also the Chairperson of the governing board of the Microfinance Institutions Network, an industry association. Ratna Dharashree Vishwanathan is an Independent Director of the Company. She holds a Bachelor of Arts degree from Utkal University, Bhubaneshwar and studied Master of Arts at the University of Lucknow. She has over 35 years of experience and has worked in the past with the Government of India (IA & AS 87), United Nations Office for Project Services, MFIN, Oxfam India, and United Nations Development Program. She is currently on the board of Moneyboxx Finance Limited, Dilip Buildcon Limited, Reach to Teach Private Limited and Reach to Teach Foundation Namrata Kaul is an Independent Director of the Company. She holds a post-graduate diploma from Indian Institute of Management, Ahmedabad and was also awarded the Chevening Scholarship to study Leadership and Excellence at the London School of Economics and Political Science. She has over 34 years of experience in the finance sector in India and UK. In the past she has worked with Grindlays Bank and Deutsche Bank and is currently an independent director on several boards including Havells India Limited, Schneider Electric, Vivriti Capital Private Limited, Bhopal Smart City Development Corporation Limited.

Financials of Fusion Micro Finance Limited IPO:

Particulars (in Cr) March-22 March-21 March-20
Net Interest Income 569 452 329
Other Income 134 43 63
Total Income 703 495 392
Operational Cost 306 215 197
Profit before Provisioning 397 280 195
Provisioning 368 220 92
Profit after Provisioning 29 60 103
PAT 24 56 99
No. of Shares (after IPO) 10.06 10.06 10.06
EPS 2.4 5.6 9.8
G.NPA 5.71% 5.51% 1.12%

Recommendation on Fusion Micro Finance Limited IPO:

Fusion Micro-finance Review and Recommendation by IZ team is 6/10 1. Company was incorporated on September 5, 1994, as Ambience Fincap Private Limited and later in 2009 was takeover by Mr. Devesh Sachdev and changed name to Fusion MicrofinanceStated. It is among the top NBFC-MFIs in India in terms of AUM as of June 30, 2022. Total AUM as on 30.06.2022 is ~7300 Crores which was just ~3600 Crores in FY20. 2. As of the 30th of June in the year 2022, Fusion Micro-Finance has 966 branches and 9,262 permanent staff distributed among 377 districts in 19 states and union territories. 3. 91% loan profile is in Rural Areas and focus customer segment is women in rural areas with an annual household income of up to 300,000. 4. The business runs on a joint liability group-lending model, wherein a small number of women form a group (typically comprising five to seven members) and guarantee one another’s loans. 5. The key product offerings are income-generating loans that provide capital for women entrepreneurs in rural areas to fund businesses operating in the agriculture-allied and agriculture, manufacturing and production, trade and retail, and services sectors. 6. In financing business the most important parameter is cost of borrowing, the same has declined for the Fusion Micro-finance from 12.33% in Fy20 to 10.43% in Fy22. 7. The gross NPA ratio was 3.67%, 5.71%, 5.51% and 1.12%, respectively, and the net NPA ratio was 1.35%, 1.64%, 2.20% and 0.38%, respectively in Fy20, Fy21, Fy22 and 3MFy23. NPAs were high during covid-19 time but now it has reduced considerably. 8. The IPO is priced at P/B of 1.84x which looks fairly priced. 

Registrar of Fusion Micro Finance Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Fusion Micro Finance Limited H-1, C Block, Community Centre, Naraina Vihar, New Delhi, 110028 Phone: +91- 011-46646600 Email: companysecretary@fusionmicrofinance.com Websitehttps://fusionmicrofinance.com/

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