Dar Credit and Capital Limited is a financial services company that specializes in offering credit solutions to low-income individuals, especially those working in Group D municipal roles such as cleaners, sweepers, and peons. The company also extends loans to small-scale vendors and shopkeepers, with a special focus on empowering women entrepreneurs.

IPO Overview

The Dar Credit and Capital IPO is a Book Built Issue entirely comprising a fresh issue of 42.76 lakh equity shares amounting to ₹25.66 crore.

• IPO Opens: May 21 2025

• IPO Closes: May 23 2025

• Allotment Date: May 26 2025 (Tentative)

• Listing Date: May 28 2025 (Tentative)

• Listing Exchange: NSE SME

The price band is set at ₹57 to ₹60 per equity share. The lot size is 2,000 shares, meaning retail investors must invest at least ₹1,20,000, and HNIs must invest a minimum of 2 lots, amounting to ₹2,40,000.

Market Maker and Managers

• Book Running Lead Manager: GYR Capital Advisors Private Limited

• Registrar: KFIN Technologies Limited

• Market Maker: SMC Global Securities Limited

At the upper end of the price band, the market capitalisation of the company will stand at ₹85.65 crore.

Grey Market Premium

As of now, the Grey Market Premium (GMP) of Dar Credit and Capital stands at ₹5. This translates to an expected listing gain of 8.33 percent. However, GMP is unofficial and speculative, based purely on demand and supply in the unorganised market, and should not be relied upon for investment decisions.

Company Leadership

Dar Credit and Capital is promoted and led by Mr Ramesh Kumar Vijay, who serves as Chairman and Whole Time Director. He holds a Bachelors in Commerce, is a Chartered Accountant, and a Fellow Member of the Institute of Chartered Accountants of India. He is also a qualified Company Secretary and has 39 years of industry experience, particularly in personal loans, unsecured MSME loans, and secured MSME lending.

He is affiliated with the BBD Bag Professional Study Circle Association as a Patron Member.

Financial Performance

The company has demonstrated a steady growth trajectory in both revenues and profitability over the last three years:

Revenue from Operations

• 9M FY25 (Dec 31 2024): ₹3103.24 lakh

• FY24: ₹3301.38 lakh

• FY23: ₹2556.97 lakh

• FY22: ₹2442.08 lakh

EBITDA

• 9M FY25: ₹2158.06 lakh

• FY24: ₹2203.86 lakh

• FY23: ₹1673.75 lakh

• FY22: ₹1603.09 lakh

Profit After Tax (PAT)

• 9M FY25: ₹491.94 lakh

• FY24: ₹396.83 lakh

• FY23: ₹293.00 lakh

• FY22: ₹250.18 lakh

The financials reflect a consistent increase in profit and operating performance, backed by a stable loan book and low NPAs.

Key Valuation Metrics

• Pre-issue EPS FY24: ₹3.97

• Post-issue EPS FY24: ₹2.78

• Annualised EPS based on latest financials: ₹6.56

• Pre-issue P E Ratio: 15.11x

• Post-issue P E Ratio: 21.59x

• Annualised P E Ratio: 9.14x

• Industry P E Ratio: 6.00x

• ROCE FY24: 9.22 percent

• ROE FY24: 6.17 percent

• RoNW FY24: 5.64 percent

These numbers show that the IPO is fully priced, with valuations above the industry average. The post-issue dilution significantly reduces the EPS, while the returns on capital and net worth remain modest.

Business Model

Dar Credit and Capital operates with a social impact angle, targeting underbanked and low-income individuals. Their core focus is on:

• Microloans for daily wage and contract workers

• Women-led micro businesses

• MSME credit solutions

• Short-term personal and group loans

The company claims to maintain strict credit evaluation practices and strong borrower relationships, especially in semi-urban and rural areas.

Risks and Considerations

• High dependency on low-income segment prone to economic shocks

• Fully priced IPO compared to peer companies in the SME financial sector

• Modest ROE and RoNW metrics despite revenue growth

• Limited market capitalisation raising liquidity concerns post-listing

Verdict

The Dar Credit and Capital IPO comes with a ₹5 GMP and 8.33 percent speculative gain expectation. However, high valuation relative to low return ratios, coupled with concentration in high-risk borrower segments, raises red flags for short-term investors.

Despite its consistent financial growth and social lending mission, the company’s IPO appears fully priced and does not offer strong listing day prospects.

Recommendation: Avoid for listing gain

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