Usha Financial Services, a non-banking finance company (NBFC) registered with the Reserve Bank of India as a NBFC-ICC (Investment & Credit), is preparing for its upcoming Initial Public Offering (IPO). With over 9 years of lending experience, the company has established itself by providing innovative lending solutions primarily to fellow NBFCs, Corporates, MSMEs, and individuals, particularly focusing on women entrepreneurs. Usha Financial Services also extends its offerings to Electric Vehicle (EV) financing, demonstrating a commitment to diversifying its financial products.

IPO Details

The Usha Financial Services IPO is a Book Built Issue amounting to ₹98.44 crores, consisting entirely of a Fresh Issue of 58.60 lakh shares. The subscription period opens on October 24, 2024, and closes on October 28, 2024. Allotment of shares is expected to be finalized on or about October 29, 2024, with a tentative listing date on the NSE SME set for around October 31, 2024.

The share price band for the IPO is set between ₹160 and ₹168 per equity share. At the upper end of the price band, the market capitalization of Usha Financial Services is projected at ₹365.19 crores. The minimum lot size for retail investors is 800 shares, requiring a minimum investment of approximately ₹1,34,400. For High-Net-Worth Individuals (HNIs), the minimum investment is 2 lots (1,600 shares), amounting to ₹2,68,800.

Financial Highlights

Usha Financial Services has shown consistent growth in its operations. For the period ended September 30, 2024, the revenues from operations were ₹2,681.26 lakhs, with fiscal revenues for the years 2024, 2023, and 2022 recorded at ₹6,396.05 lakhs, ₹4,618.73 lakhs, and ₹2,531.36 lakhs, respectively. The EBITDA for the same period was ₹1,773.94 lakhs, underlining the company's operational efficiency.

The Profit After Tax (PAT) figures were ₹504.16 lakhs for the period ended September 30, 2024, and ₹1,344.95 lakhs for fiscal year 2024. These metrics indicate Usha Financial Services' capacity to maintain profitability while scaling its operations.

Investment Considerations

For the Usha Financial Services IPO, the company is issuing shares at a pre-issue EPS (Earnings Per Share) of ₹8.64 and a post-issue EPS of ₹6.18. The pre-issue P/E (Price-to-Earnings) ratio stands at 19.44x, while the post-issue P/E is 27.18x, compared to the industry P/E ratio of 45.47x. The Return on Capital Employed (ROCE) for FY24 is 15.40%, and the Return on Equity (ROE) is 14.30%, suggesting that while the IPO is fairly priced, there may be limited upside potential compared to industry peers.

Currently, the Grey Market Premium (GMP) for Usha Financial Services is expected to be ₹0, indicating that no significant listing gains are anticipated. Given these financial indicators, potential investors should exercise caution regarding this IPO.

Subscription Status and Anchor Investors

As of 7:00 PM on October 28, 2024, the Usha Financial Services IPO has been subscribed 17.96 times on its final day of the subscription period, reflecting strong demand from investors. The company has also raised ₹27.90 crores from Anchor Investors, allocating 16,60,800 equity shares at the upper price of ₹168 per share, showcasing confidence in the company’s business model and growth trajectory.

Allotment Process

The allotment date for the Usha Financial Services IPO is scheduled for October 29, 2024. Investors can check their allotment status by visiting the IPO allotment status page and selecting Usha Financial Services from the dropdown list. They will need to provide their application number, PAN, or DP Client ID to access their status.

Utilization of IPO Proceeds

The proceeds from the fresh issue will be allocated towards the following objectives:

1. ₹7,000 lakhs to augment the capital base of the company.
2. General corporate purposes.
3. Meeting issue expenses.

Conclusion

In summary, the Usha Financial Services IPO offers an opportunity for investors to engage with a growing non-banking finance company. While the strong subscription figures indicate considerable interest, the financial metrics suggest a cautious approach. Therefore, it is recommended that risk-averse investors consider avoiding the Usha Financial Services Limited IPO for potential listing gains or long-term investment opportunities.

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