Is Manba Finance IPO Good or Bad - Detailed Review

Manba Finance Limited is kicking off its initial public offering which will be open from September 23, 2024, to September 25, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Manba Finance IPO is good or bad, whether it is worth investing in it, and so on.

In this article, we will give the Manba Finance IPO review with its business and fundamental analysis to better assess its IPO.

Manba Finance IPO - Company Overview

Manba Finance Limited, founded in 1998, operates as a Non-Banking Financial Company-Base Layer (NBFC-BL), offering a range of financial solutions. The company focuses on loans for new two-wheelers (2Ws), three-wheelers (3Ws), electric two-wheelers (EV2Ws), electric three-wheelers (EV3Ws), used cars, small businesses, and personal loans. 

The following table shows the break-up of  loans given by the company in the previous three financial years:   

As of March 31, 2024, the company manages assets worth over Rs 900 cr. It operates across six states, including Maharashtra, Gujarat, Rajasthan, Chhattisgarh, Madhya Pradesh, and Uttar Pradesh. Manba Finance runs 66 locations linked to 29 branches.

The company serves both salaried individuals and self-employed professionals. It has built a network of more than 1,100 dealers, with 190 of them being EV dealers. By leveraging its existing network, the company aims to increase market penetration. 

The following table shows the company's geographical presence through its established relationship with the dealers:

Manba Finance offers up to 85% funding on vehicle purchases and customizes loan schemes to meet customer needs. The company secures funding through a variety of sources, such as term loans and cash credit facilities from public sector banks, private sector banks, small finance banks, and other financial institutions. Additionally, it raises capital through the issuance of privately placed listed and unlisted Non-Convertible Debentures (NCDs) and Pass-Through Certificates (PTCs).

Manba Finance IPO - Financial Overview

The below table shows the financials of Manba Finance Limited for last 3 years

From the above table, we can see that the company has a robust financial performance. Its AUM has expanded consistently, increasing from Rs. 495.83 cr in FY22 to Rs. 936.86 cr in FY24, reflecting a strong loan book growth. This growth has directly contributed to an increase in interest income, which reached Rs. 168.36 cr in FY24, up from Rs. 93.98 cr in FY22.

Similarly, its profits have also increased tripling from Rs. 9.74 cr in FY22 to Rs. 31.42 cr in FY24. During FY24, the company’s net interest margin stood at 11.6% indicating the company’s ability to efficiently manage costs and generate revenue.

In terms of returns, the company has significantly improved its return ratios. The Return on Total Average Assets (ROA) increased to 3.57% in FY24 from 1.74% in FY22, reflecting better asset utilization. Similarly, the Return on Equity (ROE) has more than doubled from 6.42% in FY22 to 15.66% in FY24, demonstrating strong returns to shareholders.

On the other hand, as the company operates in a bit of a risky segment, it has a relatively high GNPA of 3.95% as of FY24. After accounting for the provision coverage of 20% allocated by the company, the Net NPA stood at 3.16%, which is still relatively high.

Manba Finance IPO - Industry Overview 

CRISIL MI&A projects domestic two-wheeler sales to grow at a compound annual growth rate (CAGR) of 8-10% between fiscal 2024 and 2027, following a strong recovery in fiscal 2023 and 2024. A key driver of this growth is expected to be the increased penetration of scooters in rural areas, as they currently hold a significant market share of around 65-75% in urban regions. Additionally, rising consumer preference for higher capacity scooters (125cc) is likely to further support demand.

CRISIL MI&A also anticipates two-wheeler financing disbursements to expand at a CAGR of 14-16% during the same period. This growth will be fueled by the recovery in scooter sales, improved urban consumer sentiment, rising penetration of electric two-wheelers, and enhancements in rural infrastructure.

Manba Finance IPO - Peer Comparison

Manba Finance Limited operates in a highly competitive financial services sector, facing challenges from both established and emerging players, including banks, NBFCs, small finance banks, and informal local financiers. Its lending model, which includes physical verification and in-person visits, may create cost and operational inefficiencies compared to fully online competitors. Additionally, its higher cost of borrowing compared to better-rated competitors poses a significant challenge. 

The below table shows the comparison of Manba Finance Limited along with its listed industry peers as of FY24:

Manba Finance IPO Details

Manba Finance IPO Date

The IPO of Manba Finance is open to subscription from September 23, 2024 to September 25, 2024. The shares will be allocated to investors on September 26, 2024, and the company will be listed in the NSE and BSE on September 30, 2024

Manba Finance IPO Issue Price

Manba Finance is offering its shares in the price band of Rs.114 to Rs.120 apiece. This means you would require an investment of Rs.15,000 per lot (125 shares) if you are bidding for the IPO at the upper price band.

Manba Finance IPO Size

The company is offering a total of 12,570,000 shares, amounting to Rs.150.84 cr which is completely done through a fresh issue.

Manba Finance IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for the Manba Finance IPO. The GMP gives an idea of market sentiment and can hint at the possible listing price, helping investors make more informed decisions

Manaba Fiance IPO Application Link

Open a free Demat account with Rupeezy today and enjoy a seamless experience when applying for the Manba Finance IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for Manba Finance IPO

Is Manba Finance IPO a Good or Bad Investment? Final Thoughts

Manba Finance IPO Review: The Manba Finance IPO presents a promising opportunity, with the company showing strong growth in the vehicle financing market, particularly in the two-wheeler segment. The business has demonstrated solid financial performance, and its focus on expanding its loan book and market reach puts it in a good position for future growth.

However, there are risks to consider. The company faces challenges in recovering loans, as indicated by its relatively high level of non-performing assets. Additionally, the competitive nature of the industry, with strong players like banks and fintech firms, adds pressure on the company’s margins and growth potential.

Overall, the IPO could be a good opportunity for investors looking to tap into the vehicle financing market, but it's important to weigh the risks related to loan recovery and competition before making a decision.

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