RNFI Services Limited is a tech enabled platform offering financial technology solutions in B2B and B2B2C financial technology arena through an integrated business model via our online portal and mobile application, focusing on providing banking, digital and Government to Citizen ('G2C') services on PAN India basis. They segregate the business primarily into four (4) segments namely (i) business correspondent services; (ii) non-business correspondent services; (iii) full-fledged money changer service; and (iv) insurance broking. As on the date of this Red Herring Prospectus, they are providing full-fledged money changer service through the Material Subsidiary (wholly owned), namely RNFI Money Private Limited which is RBI registered full-fledged money changer ('FFMC') and insurance broking service through the wholly-owned Subsidiary, namely Reliassure Insurance Brokers Private Limited which is registered as a direct broker (Life and General) with IRDAI. As on the date of this RHP, they have entered into arrangements with eleven (11) financial institutions including National Private and Public sector banks, Payment banks wherein they are engaged as their business correspondents for providing financial inclusion services. As a business correspondent, they also provide doorstep services for KYC authentication of the financial institution's customers for usage of prepaid cards and Fastag service across India. . As on March 31, 2024, they process over 115 lakhs monthly transactions, and as on June 3, 2024, they are present in over 28 States and 5 Union territories, 17,964 pin codes across the Country through the distribution network. As on March 31, 2024 they have an employee strength of 1,405 employees on a standalone basis. As on June 3, 2024, the front-end distribution network comprises over 3.60 lakh network partners spread across India providing multiple tech-enabled business correspondent services and non-business correspondent services. Under the business correspondent services segment, they provide (i) transactional business correspondent services such as Domestic Money Transfer ('DMT'), Aadhaar Enabled Payment System ('AePS'), Micro ATM ('M-ATM'); (ii) Kiosk banking services; and (iii) doorstep services to Private sector banks to do the e-KYC of banks customers for prepaid cards and fastags. Under the services segment, they also provide API infrastructure within the domains of digital banking ecosystems through the Subsidiary, Paypsrint Private Limited. Under the non-business correspondent services, they provide; (i) utilities & travel related services such as mobile and DTH recharge, services relating to Bharat Bill Payments System ('BBPS'); PAN card services; Government to Citizen ('G2C') services; Noida Power Company Limited bill payments services; IRCTC booking; flight booking services; (ii) EMI collection services; (iii) delinquent loan collections services; and (iv) sale and subscription of products and services to meet the requirement of the network partners. As per financial performance, RNFI Services Limited has posted total income / net profits of Rs 190.79 Cr / Rs 5.55 Cr (FY22), Rs 1,069.39 Cr / Rs 4.88 Cr (FY23), Rs 943.05 Cr / Rs 9.96 Cr (FY24). So as per previous financials data, company has shown good growth, but net profit margin is too low. Company has posted an average EPS of Rs 4.42 and average RoNW of 40.92% for last three fiscals. Issue is priced at a P/BV of 2.56 as per NAV of 41.04 as on Post issue. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 47.21, 53.61 and 26.30 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Choice Capital Advisors Private Limited is associated with this IPO and handled 2 IPOs in last 3 years. From last 2 SME IPOs, all opened Above issue price or at par on the day of listing. As of now from last 2 IPOs, all are trading above issue price. ( As on 16.07.24 ) As per financials, RNFI Services Limited has shown good growth, RoNW is 40.92% and P/E is respectively 47.21, 53.61 and 26.30 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced, but net profit margin is too low. Company is a tech enabled platform offering financial technology solutions in B2B and B2B2C. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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