Fedbank Financial Services Limited is coming up with an IPO consisting of a fresh issue of shares worth INR 750 crores and an offer sale. The company intends to utilize the funds towards augmentation of the bank’s Tier-I capital base to meet the Bank’s future capital requirements and to increase business of the bank.
Fedbank Financial Services Limited IPO – Important Details
|Fedbank Financial Services Limited IPO Date||November 22, 2023 to November 24, 2023|
|Fedbank Financial Services Limited IPO Listing Date||December 5, 2023|
|Fedbank Financial Services Limited IPO Price||INR 133 to 140 per share|
|Fedbank Financial Services Limited IPO Lot Size||107 Shares|
|Fedbank Financial Services Limited IPO Total Issue Size||Approx INR ₹1,092.26 Cr|
|Fedbank Financial Services Limited IPO Basis of Allotment||November 30, 2023|
|Fedbank Financial Services Limited IPO Initiation of Refunds||December 1, 2023|
|Fedbank Financial Services Limited IPO Credit of Shares to Demat||December 4, 2023|
|Fedbank Financial Services Limited IPO Issue Type||Book Built Issue IPO|
|Fedbank Financial Services Limited IPO Listing At||BSE,NSE|
Fedbank Financial Services Ltd IPO – Company Profile
Fedbank Financial Services Limited is a retail-focused non-banking finance company (“NBFC”) promoted by The Federal Bank Limited. The company has the second lowest cost of borrowing among the micro, small, and medium enterprises (“MSMEs”), gold loans, and MSME & gold loans set in India.
The company is focused on catering to the MSMEs and the emerging self-employed individuals (“ESEIs”) sector. The company had the third highest growth in disbursement among the peer set, with a three-year CAGR of 35% between Fiscals 2020 and 2023.
For three consecutive years, the company has been certified as a “Great Place to Work” by the Great Place to Work Institute.
Fedbank Financial Services Ltd IPO – Fundamental Analysis
The Fedbank Financial Services Ltd IPO presents an opportunity for investors. With consistent revenue growth, rising profits, and increasing asset values, this analysis aims to evaluate its financial standing and potential, guiding investment decisions.
The company has shown consistent revenue growth, increasing from ₹6,581.08 million in March 2021 to ₹11,101.68 million in March 2023. This indicates positive performance in generating income.
Equity and Liabilities:
Both equity and liabilities have increased steadily, which could imply that the company is funding its growth through a mix of equity and liabilities. However, the growth in liabilities should be observed closely to ensure it’s manageable and sustainable.
While revenue has grown, so have expenses. The company has been investing in its operations, which is evident from the rise in expenses from ₹6,206.38 million in March 2021 to ₹9,562.90 million in March 2023. This can be a sign of expanding operations or increased costs.
Profit After Tax (PAT):
There’s a consistent increase in the profit after tax, from ₹616.84 million in March 2021 to ₹1,801.33 million in March 2023. This is a positive sign and indicates the company’s ability to generate profits.
Return on Net Worth (RoNW):
The RoNW has shown an upward trend, which indicates the company’s profitability and efficient utilization of shareholders’ funds.
Earnings Per Share (EPS):
The EPS has been consistently rising, indicating an increase in profitability and potentially making it an attractive investment from an earnings perspective.
Net Asset Value (NAV) per Equity Share:
The NAV per Equity Share has been consistently increasing, reflecting the company’s asset value growth.
There’s a significant rise in total assets, indicating the company’s expansion and potentially positive future prospects.
Fedbank Financial Services IPO Financial Information
|Particular||As at 31 March 2021||As at 31 March 2022||As at 31 March 2023|
|Equity(₹ in millions)||8,347.34||11,535.18||13,556.82|
|Expenses (₹in millions)||6,206.38||7,444.28||9,562.90|
|Profit and Loss After Tax (₹ in millions)||616.84||1,034.59||1,801.33|
|Diluted EPS only (₹)||2.18||3.31||5.59|
|NAV per Equity Share (₹)||28.79||35.88||42.11|
|Total Assets (in millions)||54,663.05||65,557.07||90,709.91|
|Total Liabilities (in millions)||46,315.71||54,021.89||77,153.09|
Fedbank Financial Services IPO Peer Comparison
Fedbank Financial Services displays a robust position among peers with a competitive Revenue of ₹12,146.80M, Face Value ₹10, and a RoNW of 13.29%. Compared to others, it boasts a lower P/E ratio and EPS while maintaining a competitive NAV per Equity Share at ₹42.11.
|Company||Revenue (₹ in million)||Face Value per Equity Share (₹)||P/E||EPS (Basic) (₹)||RoNW (%)||NAV per Equity Share (Basic) (₹)|
|Fedbank Financial Services Limited||12,146.80||10||–||5.60||13.29%||42.11|
|Aptus Value Housing||11,289.99||2||27.04||10.11||15.06%||67.05|
|Five Star Business Finance||15,289.28||1||31.73||20.71||13.91%||148.94|
|Manappuram Finance Limited||67,499.50||2||7.28||17.72||15.55%||113.95|
|Muthoot Finance Limited||119,750.05||10||14.29||89.99||16.94%||539.69|
Fedbank Financial Services Ltd IPO Objective
Fedbank Financial Services Limited proposes to utilize the Net proceeds from the Fresh Issue towards augmenting the Bank’s Tier – I capital base to meet the bank’s future capital requirements and to increase the bank’s business, which is primarily onward lending. Further, the proceeds from the fresh issue will also be used towards meeting the expenses in relation to the Offer.
Fedbank Financial Services Ltd IPO Risks And Challenges
Fedbank Financial Services Ltd faces various challenges crucial to its IPO launch. Intense competition, regulatory changes, and technological adaptation pose risks to its business sustainability. Moreover, expansion into new markets introduces regulatory, competition, and operational challenges.
- Intense competition from banks, NBFCs, and emerging players and regulatory changes pose cost, technology, and market share challenges, impacting business sustainability and growth.
- Adapting to technological innovations is crucial; failure may impact product performance and competitiveness, posing risks to business and financial conditions.
- Expanding into new markets poses risks such as regulatory uncertainties, competition with local financiers, and operational challenges, impacting business performance and financial stability.
Fedbank Financial Services Ltd IPO – Industry & Market Potential
The global economy is witnessing tightening monetary conditions in most regions in 2022. The trade outlook for 2023 is expected to be negatively impacted because of geopolitical frictions, persisting inflation, and lower global demand. In addition, deceleration in domestic growth could lead to some softening in imports.
Over the last few years, retail credit grew robustly from ₹ 30 trillion in Fiscal 2018 to ₹ 60 trillion in Fiscal 2023, constituting 32% of total systemic credit in India. Retail credit is expected to log a further CAGR of 13-15% between fiscal 2023 and 2025. It is likely to be propelled by an increase in private consumption with a steady rise in GDP growth, a shift in the attitude of consumers towards debt, the continuing trend of urbanization and nuclearisation, increased availability of data from credit bureaus as well as non-traditional data and financiers leveraging technology and data analytics to serve their target markets more efficiently.
The Indian government announced a ₹ 450 billion partial guarantee scheme for non-banking financial companies (“NBFCs”) and ₹ 300 billion special liquidity scheme for NBFCs, housing finance companies (“HFCs”), and mutual fund institutions (“MFIs”), aimed at covering the concern of credit risk perception on mid and small size non-banks.
Fedbank Financial Services Limited IPO – Type of Offer
Fedbank Financial Services Limited plans to raise INR 750 crore through a fresh issue of new shares to strengthen its Tier-I capital base and support future capital needs. Additionally, existing shareholders are selling 7.03 crores of shares through an Offer For Sale (OFS) process. This will facilitate both capital infusion and shareholder divestment.
Fresh Issue: The company will issue new shares to raise capital, aiming to collect INR 750 crore. This fund will be utilized towards augmenting the Bank’s Tier – I capital base to meet the Bank’s future capital requirements and for increasing the Bank’s business.
Offer For Sale (OFS): Existing shareholders are selling 7.03 crore existing shares. The following are the details of the existing shareholders who are also the promoters selling the shares:
|Name of the promoter selling shareholder||Maximum number of offered shares for sale|
|The Federal Bank Limited||16,497,973|
|True North Fund VI LLP||53,825,435|
Fedbank Financial Services Ltd IPO Offer Size
Fedbank Financial Services Limited plans to launch an Initial Public Offering (IPO) involving a new issuance of shares valued at INR 750 crores, along with an offer for sale. The company aims to deploy the raised funds to strengthen the bank’s Tier-I capital base, ensuring it meets future capital requirements. Additionally, the funds will be utilized to expand the bank’s business operations.
Fedbank Financial Services Ltd IPO Allotment Structure
Fedbank Financial Services Limited’s IPO allocation designates 50% to Qualified Institutional Buyers (banks, mutual funds, insurance), 15% to Non-Institutional Investors (corporates, high-value individuals), and 35% to Retail Individual Investors (individuals with smaller investments), which complies with SEBI regulations.
- Qualified Institutional Buyers (QIB): As per SEBI regulations, 50% of the shares offered through the IPO will be reserved for Qualified Institutional Buyers. These include entities such as banks, mutual funds, and insurance companies.
- Non-Institutional Investors (NII): 15% of the shares will be reserved for Non-Institutional Investors. These typically include corporate bodies or individuals investing more than Rs.2 lakhs.
- Retail Individual Investors (RII): The remaining 35% of the shares will be allotted to Retail Individual Investors. These individual investors apply for shares with a total value of less than Rs.2 lakhs.
The company has reserved a portion of the offer for Federal Bank shareholders as well as employees.
How to apply for Fedbank Financial Services Limited IPO?
To apply for the Fedbank Financial Services Limited IPO through Alice Blue, you would typically follow these steps:
1. Open a Demat and Trading Account: If you don’t have one already, you would need to open a Demat and trading account with Alice Blue.
2. Check for IPO Details: Once your account is active, you can check for the Fedbank Financial Services Limited IPOIPO details in the IPO section of the Alice Blue platform.
3. Place the Bid: Enter the number of shares you wish to buy and place your bid within the IPO’s price band.
4. Submit the Application: Confirm all your details and submit your application.
You can apply for Fedbank Financial Services Limited’s IPO at Alice Blue[M1] in just a few clicks!
Check Allotment Status: Post the allotment process, you can check the allotment status to see if you have received any shares.
Please note that the allotment of shares is not guaranteed and will depend on the demand for the IPO.
How to Check Fedbank Financial Services Limited IPO Allotment Status on Alice Blue?
Checking the allotment status of an IPO in Alice Blue is usually straightforward. Please follow these general steps:
1. Log in to your Alice Blue Account: You can do this through the Alice Blue website or their trading app.
2. Navigate to the Portfolio or IPO Section: This might differ based on the layout of Alice Blue’s platform, but generally, you can find the status of your IPO application under the ‘Portfolio’ or ‘IPO’ section.
3. Find the IPO Allotment Status: Look for a sub-section called ‘IPO Allotment Status’ or something similar. This is where you can see the status of the IPOs you have applied for.
4. Select the Fedbank Financial Services Limited IPOIPO: If you have applied for multiple IPOs, there might be a dropdown menu or lists where you can select the IPO you are interested in. Select the Fedbank Financial Services Limited IPO.
5. Check the Status: The status of your application should be displayed here. If the shares have been allocated to you, it would be mentioned here.
If you face any issues, it’s recommended to contact Alice Blue’s customer support for detailed assistance.
Apart from Alice Blue, there are other ways to check the allotment status of the Fedbank Financial Services Limited IPO:
Registrar’s Website: Visit the website of Link In time India Private Limited, the registrar of the Fedbank Financial Services Limited IPO. On the homepage, look for the ‘IPO Allotment Status’ option. You must enter your PAN, application, or Demat account number to check your allotment status. Click on the ‘Submit’ button to view your IPO allotment status.
NSE and BSE: You can also check the allotment status on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) official websites. You would need your application number and PAN to check the status.
Please note that the allotment status will only be available after completing the allotment process, a few days after the IPO window closes.
Fedbank Financial Services Ltd IPO Offer Registrar
Link In time India Private Limited is the Fedbank Financial Services Limited IPO registrar. They are responsible for ensuring the IPO allotment and refund processes are carried out smoothly.
Contact information for the registrar:
Link In time India Private Limited
C-101, 1stFloor, 247 Park
L.B.S. Marg, Vikhroli West
Mumbai 400 083
Tel: +91 810 811 4949
E-mail: [email protected]
Fedbank Financial Services Limited IPO FAQs
What is the allotment date of the Fedbank Financial Services Limited IPO?
The allotment date will be finalized on November 30, 2023, and the allotted shares will be credited to the customers demat account by December 4, 2023.
What is the price band of the Fedbank Financial Services Limited IPO?
The price band of the shares issue is INR 133 to 140 per share.
What is the size of the Fedbank Financial Services Limited IPO?
‘Fedbank Financial Services Limited’ is launching an IPO consisting of the sale of 7.03 crores of shares by existing shareholders.
What is the listing date of the Fedbank Financial Services Limited IPO?
The listing date of the issue is December 5, 2023.