Fusion Micro Finance Ltd (FMFL), founded in 1994, provides financial services to women entrepreneurs from economically and socially disadvantaged backgrounds. Its network and services have increased access to formal credit (loans) at low-interest rates, ultimately improving the lives of people in rural India. FMFL provides financial assistance as well as financial literacy classes.
FMFL operates on a joint liability group-lending concept, in which a small group of women (5-7 members) guarantees each other's loans. The firm has largely focused on strategic regional diversification with a rural emphasis, embracing technology for development, nurturing and developing staff, and risk management.
IPO DateNov 2, 2022 to Nov 4, 2022Listing Date[.]Face Value₹10 per sharePrice₹350 to ₹368 per shareLot Size40 SharesIssue Size[.] shares of ₹10(aggregating up to ₹1,103.99 Cr)Fresh Issue[.] shares of ₹10(aggregating up to ₹600.00 Cr)Offer for Sale13,695,466 shares of ₹10(aggregating up to ₹[.] Cr)Issue TypeBook Built Issue IPOListing AtBSE, NSEQIB Shares OfferedNot more than 50% of the Net OfferNII (HNI) Shares OfferedNot less than 15% of the Net OfferRetail Shares OfferedNot less than 35% of the OfferCompany PromotersThe promoters of the Company, namely, Devesh Sachdev, Creation Investments Fusion, LLC, Creation Investments Fusion II, LLC and Honey Rose Investment Ltd
600 crore fresh equity shares will be issued in Fusion Microfinance IPO. Apart from these, an offer for sale (OFS) of 13,695,466 equity shares by promoters and existing shareholders is included. Devesh Sachdev, Mini Sachdev, Honey Rose Investment Ltd., Creation Investments Fusion, LLC, Oikocredit Ecumenical Development Co-operative Society U.A., and the Global Financial Inclusion Fund.
The issue comprises OFS and Fresh Issue. Net Proceeds from Fresh Issues will be used to Augment the capital base of the Company.
1) In the previous three years, company margins have been declining. Profits in FY20 were Rs 69.6 crores, compared to Rs 21.8 crores in FY22. Despite a rise in revenues, a decline in margins is a major issue.2) OFS receives Rs 504 crores from the total IPO proceeds, while the firm receives nothing.3) A Covid epidemic has previously harmed the industry. Such pandemics are unpredictable and may have an influence in the future.4) An increase in NPAs might have an impact on the firm.5) The microfinance business in India confronts specific risks owing to the borrowers it serves, which are not often connected with other types of lending.
The microfinance industry has recorded healthy growth in the past few years, with microfinance lenders emerging in good numbers. Fusion Micro Finance is one such company that is among the top 10 NBFCMFIs in India. It offers loans to women entrepreneurs. Its business runs on a joint liability group-lending model, wherein a small number of women form a group and guarantee one another’s loans. The company works with a strong focus on rural areas and has a well-diversified and extensive pan-India presence. The company also has access to diversified and recognized sources of capital and has a good financial track record. Although this company's margins are now in declining mode and it is facing risk due to the category of borrowers it serves, an increase in the level of NPAs could also be a concern for the company. Secondly, the company demands a price-book (P/B) multiple of 1.8 on a post-IPO basis, whereas its peers like credit access command a P/B of 3.3. Thus, considering all the factors, we recommend a Subscribe rating for this issue, but only for high-risk investors with a long-term view.
According to market watchers, the shares of Fusion Microfinance are trading at a premium (GMP) of ₹24 in the gray market today. The company's shares are expected to be listed on the stock exchanges BSE and NSE on Tuesday, November 15, 2022. The allotment of shares is expected on 10 November 2022. The company has said in its draft paper that it wants to use the capital received from this issue to increase its base.
Swastika Investmart Ltd. Group : Registered with
SEBI Reg. No. : NSE/BSE/MSEI/MCX/NCDEX: INZ000192732
Merchant Banking : INM000012102
Investment Adviser: INA000009843
CDSL/NSDL : IN-DP-115-2015
RBI Reg. No. : B-03-00174
IRDA Reg. No. : 713
NCDEX : 00844
Online Dispute Resolution : ODR
Issued in the interest of investors: Prevent Unauthorised transactions in your trading and Demat account. Update your mobile numbers/email IDs with Swastika Investmart Ltd.. Receive alerts and information of all debit and other important transactions in your trading and Demat account directly from Exchange/Depository on your mobile/email at the end of the day. KYC is a onetime exercise while dealing in securities markets. Once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary. For any grievances or queries related to Swastika Investmart Ltd., please drop an email at firstname.lastname@example.org. To see the investor charter : NSDL- https://nsdl.co.in/publications/investor_charter.php, CDSL- https://www.cdslindia.com/Investors/InvestorCharter.html. You can also register your complaint with NSE - www. nse-investorhelpline.com/NICE PLUS, BSE - email@example.com, MCX - firstname.lastname@example.org, NCDEX - email@example.com, SEBI - scores.gov.in/scores/Welcome.html. Benefits of SEBI SCORES - effective communication, speedy redressal of the grievances.“Attention Investors
.......... Issued in the interest of Investors"
Note: Standard warning- “Investment in securities market are subject to market risks, read all the related documents carefully before investing"
RISK DISCLOSURES ON DERIVATIVES.
Source: SEBI study dated January 25, 2023 on “Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment”, wherein Aggregate Level findings are based on annual Profit/Loss incurred by individual traders in equity F&O during FY 2021-22.