Fedbank Financial Services IPO

The Federal Bank Limited promotes Fedbank Financial Services Limited as a retail-focused NBFC. As of March 31, 2021, they are the quickest developing gold loan NBFC among the gold loan peer set in India. Fedbank Financial Services IPO will hit the stock market in July 2022.

About Fedbank

They are one of India’s five private bank-sponsored NBFCs. In 2021, they have the lowest borrowing costs among the MSME and gold loan peer set in India.

With a CAGR of 49 percent between  2018 and 2021, they are the NBFC with the third quickest AUM growth in the peer set in India over the last three fiscal years.

86.25 percent of their total Loan Assets are backed against tangible assets, including gold or client property, as of September 30, 2021.

They operate a “dual engine” business model, with two complementing products, gold loans and instalment loans to MSMEs and developing self-employed individuals, and they feel that this business approach allows them to grow while also providing a countercyclical hedge.

Growth

Most lenders, according to CRISIL, lend generously during good times and pull back during bad times and slowing economic development. As lenders become more cautious as the economy slows, gold loans provide as a quick, accessible, and convenient way for customers to fund short-term needs.

Their gold loans and instalment loans for MSMEs and ESEIs are complementing products. They also offer various instalment loan solutions to their target clientele, such as house loans and unsecured business loans.

According to CRISIL, financial banks in India are mostly ignoring the burgeoning self-employed individual and micro, small, and medium firm segments. They feel that this market area offers them a significant possibility to grow and expand quickly.

Loans

Housing loans, small ticket loan against property, medium ticket LAP, unprotected business loans, and gold loans are among the products they offer, all of which are tailored to meet the demands of their clients.

Between 2018 and 2021, their AUM increased at a CAGR of 49%. Between 2018 and 2021, they experienced the fastest rise in disbursement within the peer group, with a CAGR of 56 percent.

Their installment loans to MSMEs and ESEIs had an AUM of 29,338.25 million. Their gold loans had an AUM of 21,329.24 million.

Since 2018, CARE has assigned a “AA-” rating to their non-convertible debentures, and India Ratings and Research Private Limited has assigned a “AA-” rating to their NCDs and long-term bank facility.

Fedbank Financial Services IPO

Fedbank Financial Services Limited, headquartered in Mumbai has submitted Draft Red Herring Prospectus(DRHP) to Securities and Exchange Board of India(SEBI) for initial public offering (IPO) of 900 crores & 45,714,286 equity shares on 15 February 2022.

The offer includes a fresh issue of 900 Crores and there is offer for sale (OFS) of 45,714,286 equity shares by the promoters mentioned in the DRHP. They are looking for a Pre-IPO placement of 180 crores in this issue.

They are now waiting for approval from Securities and Exchange Board of India(SEBI) to float the initial public offering (IPO) in the market.

Financials Trends

Particulars	For the year/period ended ( in Cr.)
	30-Sep-21	31-Mar-21	31-Mar-20	31-Mar-19
Total Assets	5,744.74	5,466.30	4,086.19	2,150.61
Total Revenue	409.03	697.57	466.02	255.54
Profit After Tax	33.57	61.68	39.14	36.13

Basic and Diluted Earnings Per Share

Financial Period	Basic EPS (in INR)	Diluted EPS (in INR)	Weight
Financial Year 2021	2.19	2.18	3
Financial Year 2020	1.61	1.60	2
Financial Year 2019	1.76	1.76	1
Weighted Average	1.93	1.92
30 Sep. 2021	1.10	1.10

Objects of the Issue

• Prepayment / repayment of all or a portion of the outstanding borrowings of the company to be availed on consolidated basis.
• To meet common corporate objectives.

Basis of the offer

The following are some of the qualitative elements and their strengths that are used to calculate the Offer Price:

1. Their existence in sizable, underpenetrated markets with high growth potential.
2. Their “twin engine” business strategy which guarantees expansion and threat protection throughout economic cycles.
3. Emphasis on retail loan products with a difficult-to-replicate collateralized lending methodology aimed at consumers and the rising MSME sector.
4. Strong underwriting expertise and presence in specific client segment combined with comprehensive risk management capabilities centred on effective underwriting and collections.
5. Professional, cycle proven leadership team.
6. Well balanced funding portfolio with a benefit of lower cost of capital.
7. A technology-driven business with a scalable business plan.

Fedbank Financial Services Comparison

S. No.	Face Value	Company Name	PE
1	10	Aavas Financiers Limited	77.50
2	2	Aptus Value Housing Finance Limited	63.08
3	1	Five Star Business Finance Limited	–
4	2	IIFL Finance Limited	15.61
5	2	Manappuram Finance Limited	7.52
6	10	Muthoot Finance Limited	15.14
7	10	Shriram City Union Finance Limited	11.13

Note

• All of the financial data for the listed industry peers mentioned above is consolidated (unless otherwise stated) and is derived from filings with stock exchanges public on the BSE for the Financial Year ending March 31, 2021.
• The P/E Ratio was calculated by dividing the closing market price of equity shares on January 27, 2022 by the Basic EPS.

Fedbank Financial Services IPO Details

IPO Opening Date	July 2022
IPO Closing Date	July 2022
Issue Type	Book Building
Face Value	10 per share
IPO Price	0 to 0 per equity share
Market Lot	–
Min Amount	–
Listing At	BSE, NSE
Issue Size	–
Fresh Issue	900 Crore
Offer for Sale	45,714,286 Equity Shares

Fedbank Financial Services IPO Date

Fedbank IPO opening date is July 2022, and the closing date is July 2022. The Fedbank Financial Services issue may list in July 2022.

IPO Opening Date	July 2022
IPO Closing Date	July 2022
Basis of Allotment Date	July 2022
Initiation of Refunds	July 2022
Credit of Shares to Demat Account	July 2022
IPO Listing Date	July 2022

Basis of Allotment

Type	% of Offer	Basis of Allotment
Qualified Institutional Buyer	50	Roughly  equivalent
Non Institutional Investor	15	Roughly  equivalent
Retail	35	Minimum 1 lot based on availability

Fedbank IPO Status

Allotment of equity stocks subject to the Fresh Issue and transfer of the Promoter Selling Shareholders’ OFS Stocks to the winning Bidders subject to the Offer for Sale. Nevertheless, the status of the allotment has yet to be revealed.

Here, you can find the Allotment Status of Fedbank IPO.

Fedbank Financial Services IPO GMP

Fedbank IPO Grey Market Premium is 0. You can check out GMP of Other IPOs on below Links:

Date	GMP (in Rs)	Subject to Sauda	Kostak (in Rs)
July 2022
July 2022
July 2022
July 2022
July 2022
July 2022
July 2022
July 2022
July 2022
July 2022
July 2022
July 2022

Check Out the GMP of all Other IPOs

IPO Grey Market Premium

Fedbank IPO Review

Fedbank IPO review will depend on the price band which will be announced after SEBI approval. Whenever it will be announced we will update you regarding review of Fedbank Financial Services IPO is good or bad.

Fedbank IPO Risk

1. COVID-19 pandemic, and steps to contain it, have had, and may continue to have, a major negative impact on their business.
2. Their capacity to obtain cost-effective sources of capital in a timely manner is critical to their business and operations.
3. They have a high concentration of loans to emerging self-employed people and small and medium-sized businesses, and the risk of non-payment or default by the borrowers could harm their operations.
4. The RBI inspects them on a regular basis. Non-compliance with the RBI’s recommendations could have a negative impact on their business.
5. They may be unable to maintain the quality of their loan portfolio or manage the growth of their loan portfolio, resulting in significantly higher nonperforming assets (NPAs) and provisions.

Other Threats

1. They work in a highly regulated industry, and changes in the laws, rules, and regulations that apply to us could have a negative impact on their operations.
2. They generate a major percentage of their AUM from their gold loan products, and a loss of business in this area could have a negative impact on their business.
3. Interest rate volatility affects both their lending and treasury operations, causing their net interest revenue and net interest margin to fluctuate and, as a result, their profitability.
4. They may experience asset-liability mismatches, which might wreak havoc on their liquidity and, as a result, their operations and profitability.
5. Their operations are centred in three western Indian states, four southern Indian states, and one union territory.

Footprints

The company is based in Mumbai, Maharashtra. They operate in 15 Indian states and union territories, with a considerable presence in the country’s southern and western areas. As of March 31, 2020, these states generate more than 75% of India’s GDP.

They had 463 branches covering 136 districts in 15 states and union territories in India as of September 30, 2021. Their branches are in states with higher asset quality than others, including Andhra Pradesh and Rajasthan.

According to the CRISIL Report, between fiscal years 2016 and 2021, Andhra Pradesh and Rajasthan had the fourth and fifth largest credit growth. They also have individual microsites for each of their branches on their website.

Fedbank IPO Brokerage views

Here is the views of different stock brokers regarding this Fedbank IPO:

• Yes Securities : Not Updated
• Choice Brokering: Not Updated
• Axis Securities: Not Updated
• IIFL Securities: Not Updated
• Trade swift: Not Updated
• Anand Rathi : Not Updated
• ICICI Securities: Not Updated

Fedbank IPO Subscription Status

Date	Day	QIB	NII	Retail	Employees	Total Subscription
July 2022	1
July 2022	2
July 2022	3

Management

Their senior management team has extensive experience in the financial services industry, and they play a key role in the development and implementation of their business plan as well as their commitment to fair and honest business practises.

Their senior management team has a combined expertise of over 200 years in the banking and financial services industry, with a diverse track record.

Their senior management’s track record and expertise with significant events in Indian economic history gives them the ability to respond to changes, adapt, and execute new solutions to economic issues.

Their Managing Director and Chief Executive Officer has worked in the financial services industry for over 25 years.

Promoters

• Fedbank Bank Limited

Promoter’s Holding

Pre Issue Share Holding	0%
Post Issue Share Holding

Fedbank Financial Services Prospectus