The IPO will consist of both a fresh issue of shares and an offer for sale of existing shares of the promoters. After the issue, the cumulative shares of the promoters and the MFL will fall to 55 percent. A look at the financial numbers in five charts.
Moneycontrol has analyzed its Red Herring prospectus and summarized the company's management, finances and pitch in five charts. Muthoot Microfinance's financial story: It is the fifth largest NBFC-MFI in terms of asset base and recorded impressive revenue growth and significant improvement in asset quality in the last financial year. Additionally, the company has seen a significant increase in its net interest margins and there is expectation of further improvement, especially given the current trend of declining interest rates.
Return Profile of NBFC-MFI: The company's return on assets (RoA) has improved to over 2 percent (improved by 2% or over 2%?). Returns on equity remain above 10 percent. Although MML's RoA has improved, it is still much lower compared to CreditAccess Grameen, which achieved an RoA of 5 percent in the last quarter (Q2 FY24). This suggests room for further improvement.
More on the growing loan portfolio: The company is also the third largest among NBFC-MFIs in South India in terms of gross loan portfolio, the largest in Kerala in terms of MFI market share and a major player in Tamil Nadu with nearly 16 per cent market share. In an interview with Moneycontrol, the company said it expects gradual growth from the northern region.
Shareholding pattern: Promoters, including Muthoot Microfin, hold 69.08 percent shares in the company and the remaining 28.53 percent (both do not add up to 100) percent are owned by public shareholders, including Greater Pacific Capital WIV (stake 19.06 percent) and investment management company Creation Investments India LLC (9.01 percent share).
Valuation compared to peers: Based on FY23, the valuation of Muthoot Microfinance appears cheaper than that of CreditAccess Grameen Limited. But more or less in line with other small finance banks like Equitas Small Finance Banks, Ujjivan Small Finance Banks and slightly higher than Bandhan Bank and Suryoday Small Finance Bank Ltd. However, MML's IPO price is 1.6 times (in the money) the book value estimated FY25 value.
Nikki Mirchandani NICKEY MIRCHANDANI deputy editor at Moneycontrol. She is a presenter and stock market enthusiast with over 12 years of experience who loves reading between the lines and skimming numbers.
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