Muthoot Microfin Limited IPO

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  1. Business Model and Focus:
    • The institution operates as a microfinance institution, primarily providing micro-loans to women customers in rural regions of India.
    • The focus is on income generation purposes, catering to low-income groups.
  2. Market Position:
    • As of December 31, 2022, it is identified as the fourth largest NBFC-MFI in India in terms of gross loan portfolio.
    • Noteworthy rankings include being the third largest among NBFC-MFIs in South India and the largest in Kerala in terms of MFI market share.
  3. Financial Metrics:
    • As of March 31, 2023, the gross loan portfolio amounts to ₹92,082.96 million.
    • The institution has 2.77 million active customers, served by 10,227 employees across 1,172 branches in 321 districts in 18 states and union territories in India.
  4. Ownership and Group Affiliation:
    • A part of the Muthoot Pappachan Group, a conglomerate with a history of over 50 years in the financial services business.
    • Muthoot Pappachan Group holds a majority share (54.16%) in the microfinance institution.
  5. Product Offering:
    • The institution offers a wide range of lending products, including group loans, individual loans, life betterment solutions, health and hygiene loans, and secured loans like gold loans.
    • Focus on serving the life-cycle needs of rural households, particularly women.
  6. Technology Integration:
    • Significant implementation of technology in microfinance operations.
    • Use of a unique credit scorecard developed with Equifax for assessing customer creditworthiness.
    • Proprietary application “Mahila Mitra” facilitates digital payments and has garnered a substantial user base.
  7. Strategic Initiatives:
    • Collaboration with M-Swasth Solutions to provide digital healthcare facilities through e-clinics.
    • Offering natural calamity insurance to customers to protect against risks associated with climate change-induced disasters.
  8. Awards and Certifications:
    • Recognition for integrating social values into business practices, including awards for contributions to water and sanitation lending.
  9. Management and Investors:
    • The board, promoters, and senior management comprise experienced professionals and industry experts.
    • Supported by notable investors, including Creation Investments India LLC and Greater Pacific Capital WIV Ltd.

Objects of the Muthoot Microfin Limited IPO:

The Company proposes to utilise the Net Proceeds from the Fresh Issue towards augmenting the capital base to meet future capital requirements. The main objects and objects incidental and ancillary to the main objects set out in the Memorandum of Association enable the company: (i) to undertake the existing business activities, and (ii) to undertake the activities proposed to be funded from the Net Proceeds. Further, the Company expects to receive the benefits of listing the Equity Shares on the Stock Exchanges, including enhancing the brand image among existing and potential customers and creating a public market for the Equity Shares in India.
DRHP of Muthoot Microfin Limited IPO

Muthoot Microfin Limited IPO Details:

Open Date: Dec 18 2023
Close Date: Dec 20 2023
Total Shares: 32,989,690
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 960 Cr.
Lot Size: 51 Shares
Issue Price: ₹ 277 - 291 Per Equity Share
Listing At: NSE,BSE
Listing Date: Dec 26 2023

Promoters And Management:

Thomas Muthoot is one of the Promoters and the Managing Director of the Company. He holds a bachelor of law degree from University of Kerala. He is on the board of directors of several companies including Muthoot Capital Services Limited, Muthoot Fincorp Limited, Muthoot Housing Finance Company Limited and Muthoot Hotels Private Limited. He has over 37 years of experience in the field of financial services. Thomas John Muthoot is one of the Promoters and a Non-Executive Director of the Company. He holds a bachelor of commerce degree from University of Kerala. He has also completed owner/president management program from Harvard Business School. He is on the board of directors of several companies including Muthoot Fincorp Limited, Muthoot Capital Services Limited, Muthoot Housing Finance Company Limited and Muthoot Hotels Private Limited. He has over 37 years of experience in the field of financial services. Thomas George Muthoot is one of the Promoters and a Non-Executive Director of the Company. He attended University of Kerala to pursue bachelor’s in commerce. He is on the board of directors of several companies including Muthoot Fincorp Limited, Muthoot Capital Services Limited, Muthoot Housing Finance Company Limited and Muthoot Hotels Private Limited. He was previously the chairman of NBFCs Kerala and a committee member of the Finance Companies Association, Chennai. He has over 37 years of experience in the field of financial services.

Financials of Muthoot Microfin Limited IPO:

Particulars (Cr) FY23 FY22 FY21
Revenue from operations 1428.76 832.51 684.16
Operating expenses 461.15 326.91 255.67
EBITDA 788.49 425.66 327.21
Depreciation 26.61 20.78 18.83
EBIT 761.88 404.88 308.38
Interest 549.01 340.16 299.32
PBT 212.87 64.72 9.06
Tax 48.98 17.32 2
Consolidated PAT 163.89 47.4 7.05
EPS 9.6 2.7 0.4

Recommendation on Muthoot Microfin Limited IPO:

Review and Recommendation of Muthoot Microfin IPO by IZ team is 5/10

Issue Details:

a) Issue Size: ₹960 Cr (upper band). b) Fresh Issue: 261.2 lakh shares. c) Offer for Sale: 68.7 lakh shares. d) Price Band: ₹277-291. e) Minimum Lot: 51 shares.

Use of Proceeds:

a) Fresh Issue: ₹760 Cr for existing business activities and proposed activities funded from net proceeds. b) Offer For Sale: ₹200 Cr

Financials:

a) FY23 Revenue: ₹1428 Cr b) FY22 Revenue: ₹832 Cr c) FY21 Revenue: ₹684 Cr

Company Overview:

a) Focused on providing microfinance to women in rural India. b) Fifth largest NBFC-MFI in India by gross loan portfolio. c) Largest in Kerala, key player in Tamil Nadu. d) Gross Loan Portfolio: ₹10867 Cr as of September 30, 2023. e) Active Customers: 3.19 million, serviced by 12297 employees across 1340 branches.

Valuation:

Valued at P/BV of 2.2X with a post-issue market cap of ₹4960 Cr

Strengths:

a) Market leadership with pan-India presence. b) Focus on rural markets with high growth potential. c) Strong brand recall and synergies with the Muthoot Pappachan Group. d) Robust risk management framework ensuring healthy portfolio quality. e) Effective use of technology in operations.

Management and Governance:

a) Experienced and professional management with strong corporate governance. b) Support from promoters and investors.

Key Strategies:

a) Expansion of geographical footprint across India. b) Enhance IT for customer service, operational efficiency, and cost optimization. c) Diversification of sources of funds. d) Leveraging existing branch network for customer base and gross loan portfolio expansion.

Industry Outlook:

a) Indian microfinance industry expected to grow with a CAGR of 18-22% between FY 2023-2025. b) NBFC-MFIs anticipated to grow faster than overall MFI industry.

Risks:

a) Potential increase in non-performing assets and related provisions and write-offs. b) Vulnerability to interest rate risk affecting net interest income and margin.

Lead Manager of Muthoot Microfin Limited IPO:

  1. Axis Capital Limited
  2. ICICI Securities Limited
  3. JM Financial Consultants Private Limited
  4. SBI Capital Markets Limited

Registrar of Muthoot Microfin Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Muthoot Microfin Limited 13th Floor, Parinee Crescenzo, Bandra Kurla Complex Bandra East, Mumbai 400 051, Phone: +91 48 4427 7500 Email: info@muthootmicrofin.com Website: https://muthootmicrofin.com/

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