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The Indian primary market is set to witness the arrival of Manba Finance Limited's initial public offering (IPO) on September 23rd, 2024. The IPO, which will remain open for bidding until September 25th, marks the company's foray into the public markets. Manba Finance, a Non-Banking Financial Company (NBFC), has set the price band for its IPO at ₹114 to ₹120 per equity share. This book build issue aims to raise a substantial ₹150.84 crore through the issuance of fresh shares.
The anticipation surrounding the IPO is evident in the grey market, where Manba Finance shares are trading at a premium of ₹60 today. This indicates a high level of interest from investors, who are willing to pay a premium over the expected IPO price to secure shares. The grey market premium often serves as an unofficial barometer of investor sentiment and potential demand for an IPO.
The Manba Finance IPO offers investors the opportunity to participate in the growth of a company operating in the financial sector. The company focuses heavily on vehicle loans, particularly two-wheelers, which account for a significant portion of its portfolio and revenue. However, concerns have been raised regarding the sustainability of the high returns generated by this niche, and the company's underwriting capabilities have been highlighted as a potential weakness.
While Manba Finance's recent 48% AUM growth in FY24 is encouraging, it is partly attributed to a one-time gain from asset recovery, potentially masking underlying financial challenges. Furthermore, the company's credit rating of BBB+ and its expensive valuation at 1.7x post-money book value raise further concerns for investors. The risks associated with investing in Manba Finance appear to outweigh any potential gains, according to some analysts.
Source: Manba Finance IPO opens tomorrow: GMP, price, review, other details of upcoming IPO in 10 points