Incorporated in 1992, Muthoot Microfin Limited provides micro-loans to women customers (primarily for income generation purposes) with a focus on rural regions of India. The company has a major presence in southern states of India. As of 31 March 2023, it is the fifth largest NBFC-MFI (Non-Banking Financial Company - Micro Finance Institution) in India in terms of the gross loan portfolio.
As of 30 September 2023, the company has 3.19 million active customers served by 12,297 employees. It is present in 339 districts in 18 states and union territories in India with its network of 1,340 branches. It emphasises on the under-served rural markets which have growth potential as well as in order to ensure ease of access to customers.
It is part of the Muthoot Pappachan Group, a business conglomerate with presence across financial services, automotive, hospitality, real estate, information technology infrastructure, precious metals and alternate energy sectors and a history of over 50 years in the financial services business.
The company’s loan products comprise income generating loans such as group loans, Pragathi loans (interim loans for existing customers), individual loans and Suvidha loans (digitally accessible). It also offers life betterment solutions such as mobile phone loans, solar lighting product loans etc, health and hygiene loans such as sanitation improvement loans, and secured loans in the form of gold loans and Muthoot Small & Growing Business (MSGB) loans.
It significantly incorporates the use of technology in its operations so that 20% of its repayments were collected on a digital basis in FY23 and 2.46 million customers have transacted digitally via its Mahila Mitra application and other digital payment methods as of 30 September 2023. It has also received multiple awards for the same.
To provide digital healthcare facilities, it collaborates with M-Swasth Solutions and has set up 460 e-clinics across 460 of its branches as of 30 September 2023. 14% of its customers have enrolled in these e-clinics and have facilitated 98,844 medical consultations and 65,878 teleconsultations. It also provides natural calamity insurance to its customers and has done so for 23% of its clients as of 30 September 2023.
The company’s gross loan portfolio stands at ₹10,867 crore as of 30 September 2023 which has seen a CAGR rise of over 22% between FY21 and FY23. During the same period, its net profit rose at a CAGR of 186%. Moreover, the MFI industry is expected to grow at a CAGR of 18%-22% between FY23 and FY25. NBFC-MFIs especially, are expected to grow at a much faster rate of 25%-30% compared with the MFI industry. All of this could be beneficial for the company.
And now, Muthoot Microfin Limited is coming out with its initial public offer (IPO). The IPO will be an offer for sale as well as a fresh issue. The money raised through the fresh issue will be utilised to augment the capital base of the company. Its shares will be listed on the NSE and the BSE.
Here are key details about the Muthoot Microfin IPO:
Company Name — Muthoot Microfin Limited
Company Type — Private
Company Established — 1992
IPO Open Date — 18th December 2023
IPO Close Date — 20th December 2023
IPO Allotment Status — 21st December 2023
Credit of Shares to Demat — 22nd December 2023
IPO Listing Date — 26th December 2023
IPO Face Value — ₹10 per share
IPO Lot size — 51 shares
IPO Issue Size — Approx ₹960 crore
IPO Listed at — NSE, BSE
IPO Price — ₹277 – ₹291 per share
- Market leadership with a pan-India presence as it has expanded its operations in the North, East and West India in the past five years.
- Rural focused operations, with a commitment towards health and social welfare of customers through the provision of e-clinics and natural calamity insurance.
- Brand recall and synergies with the Muthoot Pappachan Group which serves 8.7 million unique customers as of 30 September 2023.
- Robust risk management framework as it had the third lowest net NPA (Non-Performing Asset) ratio of 0.33% among the selected NBFC-MFIs as of 30 September 2023 along with a collection efficiency of 95% in FY23.
- Streamlined operating model with effective use of technology and an information technology team of 102 members as of 30 September 2023.
- Access to diversified sources of capital such as public sector banks, private sector banks, small finance banks, foreign banks, other non-banking financial institutions, developmental financial institutions and public investors.
Risks and threats
- Operates in a risky industry as the customer segment has limited sources of income, savings and credit histories.
- Vulnerable to interest rate risks as interest income is its primary revenue source.
- Holds debt securities amassing to ₹1,435 crore and debt borrowings amassing to ₹6,310 crore as of 30 September 2023.
- Has experienced negative cash flows from operating and investing activities consecutively in the last three years.
- Derives a significant portion of its revenue from South India making up 66%, 64% and 55% of its gross loan portfolio in FY21, FY22 and FY23 respectively.
You can now apply for the Muthoot Microfin IPO on Upstox here.