By Akme Fintrade (India) Ltd has opened its IPO for subscription today in a significant move for the non-banking finance sector. The IPO, set to close on June 21, has generated considerable buzz in the financial community, with a price band between ₹114 and ₹120 per share.
The Udaipur-based NBFC, known for its focus on providing financing solutions to rural and semi-urban communities, raised about ₹38 crore from anchor investors ahead of the public issue. This pre-IPO success was marked by participation from prominent funds like Sigma Global Fund, Zeal Global Opportunities Fund, SB Opportunities Fund 1, and Vikasa India EIF Fund 1.
The IPO structure allocates 50% of the shares to QIB, 15% to non-institutional investors, and 35% to retail investors, with a segment reserved for employees totaling 5,50,000 equity shares. The lot size for the IPO is set at 125 equity shares, with subsequent lots being multiples of 125.
As of the first day of bidding, the IPO has seen a favorable response from retail and non-institutional investors. According to data from the BSE at 11:27 IST, the overall subscription status is 60%, with the retail portion booked at 92%, the NII portion at 84%, and the employee section at 14%. In total, the initial share sale has received bids for 47,46,500 shares against the 78,65,000 shares on offer.
Despite this positive start, investment experts have advised caution. Swastika Investmart Ltd, in its analysis, noted that while Akme Fintrade has shown solid financial performance and has a significant presence in underbanked regions, potential investors should consider several risks. The NBFC sector in India is highly competitive, requiring strategic differentiation to maintain market share.
Akme Fintrade has also faced compliance issues in the past, raising further concerns. Additionally, the company’s significant non-performing assets and poor credit rating suggest potential future challenges. The brokerage firm has rated the IPO neutrally, indicating that while the grey market premium suggests some investor interest, the associated risks might outweigh the potential rewards for most investors.
Dilip Davda, a contributing editor at Chittorgarh, echoed similar sentiments. He pointed out that the financial services market is highly competitive and fragmented, with ever-changing regulatory guidelines. Based on the company’s FY24 annualized profits, the issue is priced aggressively, leading him to recommend against participating in what he views as an expensive offer.
The GMP for Akme Fintrade’s IPO is currently at +40, indicating that shares are trading at a ₹40 premium in the grey market. This suggests an expected listing price of ₹160 per share, which is 33.33% higher than the upper end of the IPO price band. Despite this positive indication from the grey market, potential investors are advised to weigh the potential rewards against the risks highlighted by experts.
Akme Fintrade, which operates as a non-systemically significant non-deposit-taking NBFC registered with the RBI, has been in the lending business for over two decades. Its primary focus is on providing vehicle financing and business finance products to small business owners in rural and semi-urban India.
The IPO, worth ₹132 crore, consists entirely of a fresh issue with no offer-for-sale component. The company plans to use the net proceeds from the issue to increase its capital base, meeting future capital requirements expected to arise from business and asset expansion. A portion of the proceeds will also be used to cover issue-related expenses.
Gretex Corporate Services Limited is the book-running lead manager for the IPO, and Bigshare Services Pvt Ltd is the registrar. With mixed reviews from market analysts and detailed financial considerations, potential investors are encouraged to conduct thorough research and consider their risk tolerance before making a decision on this IPO.
