IBL Finance Limited commenced the lending business to self-employed professional and small business entrepreneurs during the financial year March 31, 2019. Subsequently, from the Fiscal 2020 they migrated to fintech based financial services platform. As a technology driven fintech company they leverage technology and data-science to make lending quick and easy. The Company through its a mobile App provides instant personal loans which is almost 100% digital process. Company launched the mobile App based personal loans business under the 'IBL: Instant Personal Loan' brand. Under the personal loan lending business, they extend instant personal loans up to Rs 50,000 with tenors of up to 12 months through an entirely digital mobile App-only process. Since the launch and up to March 31, 2023, they have disbursed 1,63,282 personal loans amounting to Rs 7,105.44 lakhs. As of March 31, 2023, the personal loan business had an AUM of Rs 1461.18 lakhs and they disbursed 1,22,078 personal loans amounting to Rs 5234.70 lakhs, with an average ticket size of approx. Rs 4500. The average tenor of loans which is outstanding at the end of Fiscal 2023 is 5 months. To ensure the growth is sustainable and profitable, they place strong focus on both credit quality and pricing. They have been successful in building the underwriting platform that help them aggregate data from different mediums and generate a credit report with over 500 data points. As of March 31, 2023, over 91% of the personal loan customers had Equifax credit scores of above 700. As per financial performance, IBL Finance Limited has posted total income / net profits of Rs 1.13 Cr / Rs (0.09) Cr (FY21), Rs 3.27 Cr / Rs 0.43 Cr (FY22), Rs 13.33 Cr / Rs 1.93 Cr (FY23) and Rs 4.93 Cr / Rs 1.21 Cr (upto 31.07.23 FY24). So as per previous financials data, company has shown exceptional growth. Company has posted an average EPS of Rs 0.66 and average RoNW of 8.19% for last three fiscals. Issue is priced at a P/BV of 2.29 as per NAV of 22.28 as on post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 295.38, 65.42 and 34.86 respectively, which looks aggressively priced. As per RHP, comparison between peers is shown in above table. On BRLM's front, Fedex Securities Private Limited is associated with this SME IPO and handled 16 SME IPOs in last 3 years. From last 10 IPOs, three opened below issue price and remaining opened above issue price on the day of listing. As of now from last 10 IPO, four are trading below issue price and remaining are trading above issue price. ( As on 06.01.24 ) As per financials, IBL Finance Limited has shown good growth, RoNW is 9.41% and P/E is respectively 295.38, 65.42 and 34.86 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and maintaining such margins & growth, in future, is very difficult. Company is in business of providing personal loans using mobile app instantly, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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