Usha Financial Services Limited, a non-banking finance company (NBFC) registered with the Reserve Bank of India, is preparing to launch its IPO to raise ₹98.44 Crores. The IPO consists entirely of a fresh issue of 58.60 lakh shares priced between ₹160 and ₹168 per equity share. This initial public offering is scheduled to open for subscription on October 24, 2024, and will close on October 28, 2024.

Allotment is expected to be finalized on or about October 29, 2024, with the shares anticipated to list on the NSE SME by October 31, 2024. This IPO offers a minimum lot size of 800 shares, requiring a minimum investment of ₹1,34,400 for retail investors. High-Net-Worth Individuals (HNIs) must invest in at least 2 lots, totaling ₹2,68,800.

Financial Performance Overview

The market capitalization of Usha Financial Services at the upper price band of ₹168 will be ₹365.19 Crore. The Grey Market Premium (GMP) is currently reported at ₹0, indicating that no significant trading is occurring based on this metric. The GMP reflects the demand and supply dynamics in the unorganized market, and its current value does not provide a reliable gauge for potential listing gains.

As of 10:13 AM on October 24, 2024, the live subscription status indicates that the IPO is subscribed 0.02 times on its opening day. Anchor investors have also shown interest, with Usha Financial Services raising ₹27.90 Crores by allocating 16,60,800 equity shares at the upper price of ₹168.

Financial Metrics and Investment Insights

The company's financial health appears stable, with revenues from operations for the period ending September 30, 2024, reported at ₹2,681.26 lakhs. The Profit After Tax (PAT) for the same period stands at ₹504.16 lakhs, reflecting an upward trend compared to previous fiscal years. The Earnings Per Share (EPS) is ₹8.64 pre-issue and ₹6.18 post-issue.

When analyzing the valuation, the pre-issue Price-to-Earnings (P/E) ratio is 19.44x, while the post-issue P/E ratio rises to 27.18x. This is significantly lower than the industry average of 45.47x, suggesting that the IPO is relatively fairly priced. The Return on Capital Employed (ROCE) and Return on Equity (ROE) for FY24 are 15.40% and 14.30%, respectively, indicating efficient utilization of capital.

Investment Recommendation

Given the current financial performance and valuation metrics, we advise risk-averse investors to avoid the Usha Financial Services Limited IPO for both listing gains and long-term investment purposes. The grey market's lack of premium further signals caution for potential investors.

Conclusion and Resources

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