FedBank Financial Services lists at a discount; opens at Rs 138 per share on the NSE

FedBank Financial Services Limited, a subsidiary of The Federal Bank Limited, offers a spectrum of financial solutions including Gold Loans, Home Loans, Loan Against Property (LAP), and Business Loan Services, which debuted on the Indian stock market today.

Upon its debut on the BSE, the stock opened at Rs 137.75 per share, reflecting a 1.60% discount compared to the issue price of Rs 140 per share from its initial public offering. Conversely, on the NSE, the stock debuted at a discount of Rs 138 per share.

As of the current moment, the stock is being traded at Rs 133.55 per share on the BSE, having reached intraday highs and lows of Rs 137.75 and Rs 133.15, respectively. The present market capitalisation of the company stands at Rs 4,912 crore.

The book-running lead managers for the IPO were ICICI Securities Limited, BNP Paribas, Equirus Capital Private Limited, and JM Financial Limited. Additionally, Link Intime India Private Limited is the issue’s registrar.

IPO Proceeds 

The company plans to allocate the net proceeds from the issue for the following purposes and they are strengthening the company’s Tier I capital base to fulfil future capital needs resulting from business and asset expansion and covering offer-related expenses.

Company profile

FedBank Financial Services Limited, a subsidiary of The Federal Bank Limited, offers a spectrum of financial solutions including Gold Loans, Home Loans, Loan Against Property (LAP), and Business Loan Services.

Fedbank, a retail-centric non-banking financial company (NBFC), stands out for having the second lowest borrowing costs within the micro, small, and medium enterprises (MSMEs), gold loan, and MSME & gold loan peer group in India for Fiscal 2023. The company primarily caters to clients from the MSME and emerging self-employed individuals (ESEI) sectors.

Their product portfolio comprises mortgage loans such as housing loans, small and medium ticket loans against property (LAP), unsecured business loans, and gold loans. Additionally, the company operates a Phygital doorstep model, blending digital and physical approaches, to offer tailored services across all its products to customers.

Subscription details 

On November 24, 2023, the final day of the IPO window, the IPO witnessed a moderate response, especially when compared to other IPOs recently listed, with a subscription rate of 2.24 times. The public issue received moderate interest, with the retail category being subscribed 1.88 times, the QIB category achieving a subscription rate of 1.49 times, and the NII category reaching a subscription rate of 1.49 times.

The company attracted Rs 324.68 crore from various anchor investors by allocating 2.31 crore equity shares at Rs 140 per share. The complete lock-in period for these anchor investors ends on April 3, 2024.

The IPO price range was set between Rs 133 and Rs 140, with a face value of Rs 10 per share and a lot size of 107 shares. The total size of the company’s IPO was Rs 1,092 crore, and the final share issue price was fixed at Rs 140 each.

Financial Performance

Conclusion 

The key dilemma for investors lies in whether to hold onto their shares. Those who applied for the IPO solely with the intention of capitalising on listing gains have been disappointed, as the stock is listed at a discount, and they may consider closing their position.

Conversely, investors with a higher risk tolerance might opt to hold onto their shares for the medium to long term, as this strategy could yield benefits over time.

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.