Usha Financial Services Limited is preparing to launch its Initial Public Offering (IPO) from October 24 to October 28, 2024, with the goal of raising approximately ₹98.45 crores. As a prominent RBI-licensed Non-Banking Financial Company (NBFC), Usha Financial Services offers a range of financial products, including loans for MSMEs, agriculture, and home improvement. The IPO will consist of a fresh issue of 58.60 lakh shares priced between ₹160 and ₹168 each. The proceeds will primarily be utilized to enhance the company’s asset base and support its ambitious target of achieving an Assets Under Management (AUM) of ₹5,500 million by March 2025.
₹10
₹168
₹164
Expert Opinions
The Usha Financial Services IPO is attracting positive market sentiment, reflecting growing investor confidence in the financial services sector, particularly for NBFCs catering to MSMEs and agriculture. The company’s strengths include a diverse portfolio of financial products and a solid track record of revenue growth, with a 38% increase reported for FY2024. However, potential risks and challenges involve the need for substantial capital and the impact of credit quality deterioration on operations.
In terms of valuation analysis, the IPO price band of ₹160 to ₹168 per share appears reasonable, with a price-to-earnings ratio of 19.83, suggesting a fair valuation relative to industry peers. The growth prospects are promising, supported by plans to expand its asset base significantly. For investors, a long-term investment perspective is advisable, as Usha Financial Services is well-positioned to benefit from increasing demand for accessible financial solutions in an evolving market landscape.
Investor Considerations
Investors considering the Usha Financial Services IPO should evaluate several essential factors. The company performance and fundamentals are strong, with a reported revenue of ₹2,681.26 million and a profit after tax of ₹504.16 million for FY2024, indicating solid growth. The sector outlook for NBFCs remains positive, driven by increasing demand for financial services among MSMEs and individuals, particularly in underserved markets.
In terms of IPO valuation, the price band of ₹160 to ₹168 per share appears reasonable given the company’s robust financial metrics and a return on net worth of 14.30%. The growth prospects are promising, supported by an ambitious target to achieve an Assets Under Management (AUM) of ₹5,500 million by March 2025. However, potential risk factors include reliance on external financing and possible credit quality deterioration. For investors, a long-term investment horizon is advisable, as Usha Financial Services is well-positioned to capitalize on the growing demand for accessible financial solutions.
| Date | GMP | Trend |
|---|---|---|
| 30 Oct 2024 10.59 | ₹10 | --- |
| 29 Oct 2024 10.43 | ₹10 | --- |
| 28 Oct 2024 17.00 | ₹10 | Down |
| 27 Oct 2024 13.21 | ₹30 | --- |
| 26 Oct 2024 11.12 | ₹30 | Down |
| 25 Oct 2024 10.34 | ₹50 | Up |
| 24 Oct 2024 10.48 | ₹40 | --- |
| 23 Oct 2024 11.31 | ₹40 | --- |
| 22 Oct 2024 10.58 | ₹40 | Up |
| 21 Oct 2024 11.19 | ₹30 | --- |
| 19 Oct 2024 18.39 | ₹30 | --- |
FAQs
The Grey Market Premium (GMP) of ₹10 suggested a modest premium listing at ₹178. However, the stock actually listed at a slight discount of 2.38% at ₹164. The GMP not only failed to predict the direction of the listing (predicting a premium when it actually listed at a discount), but also had a prediction error of 7.87%.
Usha Financial Services IPO Current GMP is ₹10.
Usha Financial Services IPO Expected Returns is 5.95%.
Usha Financial Services IPO estimated listing price is ₹178.