Belstar Microfinance gets SEBI nod for IPO

The biggest nonbank financial company (NBFC) in India for gold loans is Muthoot Finance Ltd. The business not only finances gold loans but also sells gold coins, provides insurance, and facilitates money transfers.

Belstar Microfinance got approval from SEBI to launch an IPO:

The Securities and Exchange Board of India (SEBI) gave Belstar Microfinance, the microfinance division of gold loan financier Muthoot Finance Ltd., permission to begin its initial public offering (IPO) on Monday. A new issue of Rs. 1,000 crore and an offer for sale (OFS) of Rs. 300 crore will be part of the IPO. Belstar Microfinance filed preliminary documents with SEBI, the capital markets regulator, in May of this year in order to raise Rs. 1,300 crore through an initial public offering (IPO).

A variety of loan products are available from Belstar Microfinance, a non-banking finance company known as Micro-Finance Institution (NBFC-MFI), including micro-enterprise, small enterprise, consumer goods, festival, education, and emergency loans.

Danish asset management company MAJ Invest intends to sell shares for Rs 175 crore during this OFS. Arum Holdings and Augusta Investments Zero Pte will follow with shares valued at Rs 97 crore and Rs 28 crore, respectively. Axis Capital, HDFC Bank, SBI Capital Markets, and ICICI Securities are the merchant bankers managing the initial public offering.

In 2018 and 2022, Maj Invest made two initial investments in Belstar Microfinance. As of right now, one of the promoters, Muthoot Finance, owns slightly more than 66 percent of Belstar Microfinance.

Belstar Microfinance’s total operating revenue increased from Rs 727 crore on March 31, 2022, to Rs 1,283 crore on December 31, 2023, per the draft red herring prospectus (DHRP). Its profit increased from Rs 45 crore to Rs 235 crore in Q1 FY25 from the same period the year before.

The stock price of Muthoot Finance and performance:

The stock has dropped 0.22% from its 52-week high of Rs. 2,001.60 per share to its current trading price of Rs. 1,960.40 per share. Considering the stock’s current price, this is very near the 52-week high and could soon signal a breakout. With the recently completed June quarter bringing in the highest-ever consolidated loan assets under management of Rs. 98,048 crore, Muthoot Finance recorded its highest-ever consolidated profit of Rs. 1,196 crore.

Conclusion: Belstar Microfinance is going to use this fresh issue of Rs. 1000 crore for onward lending and OFS of Rs. 300 crore for general corporate purposes.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.