Laxmi India Finance IPO

Laxmi India Finance Limited, incorporated in 1996, is a Non-Banking Financial Company (NBFC) that provides a range of secured lending products, including MSME loans, vehicle loans, and construction loans. The company focuses on supporting small businesses and entrepreneurs, with over 80% of its MSME loans classified as Priority Sector Lending. As of June 30, 2024, it serves 26,065 customers—15,732 active MSME borrowers and 6,146 active vehicle loan customers—marking a 78.92% increase from March 2022. Laxmi India sources funds from 43 lenders, including banks and financial institutions, through various financial instruments such as term loans, non-convertible debentures (NCDs), and overdraft facilities.

With a presence across Rajasthan, Gujarat, Madhya Pradesh, and Chhattisgarh, the company operates 139 branches, with the largest concentration in Rajasthan. It employs a centralized, tech-enabled collections team of 255 members as of September 30, 2024, using a dedicated app to monitor repayments and defaults in real-time. Laxmi India’s loan offerings include secured MSME loans of ₹0.05–2.5 million with a loan-to-value (LTV) ratio of 65%, vehicle finance for personal and commercial vehicles, and construction loans up to ₹2.5 million with interest rates ranging from 18% to 28%. As of September 30, 2024, the company has a total workforce of 1,252 employees.

Laxmi India Finance IPO Strengths

• Laxmi India Finance has demonstrated steady revenue growth over recent years, with revenue increasing from ₹97.59 crore in FY22 to ₹248.04 crore in FY25, indicating strong business momentum.
• The company’s net income rose significantly from ₹14.65 crore in FY22 to ₹36.01 crore in FY25, reflecting enhanced operational efficiency and effective cost management.
• Laxmi India Finance offers a variety of loan products, including MSME loans, personal loans, vehicle loans, business loans, and construction loans, enabling it to serve a wide range of customer segments.
• Laxmi India Finance is increasing its footprint by expanding into untapped regions, especially rural and semi-urban areas, thereby broadening its market reach.
• The firm raises capital from multiple channels including public and private sector banks and financial institutions, reducing dependence on a single source and enhancing liquidity.
• Loan disbursements have surged notably, with ₹525 crore disbursed in FY24, reflecting accelerating demand and increased penetration in existing and new markets.

Laxmi India Finance IPO Risks

• Over 80 percent of Laxmi India Finance’s loan portfolio is concentrated in Rajasthan. This exposes the company to regional economic downturns, regulatory changes, or local disruptions that could adversely affect borrower repayment capacity and business stability.
• With a relatively low tenure of loans and a growing loan book, there is a risk associated with early delinquency or lack of seasoning, making the asset quality more vulnerable to economic or borrower-specific shocks.
• The NBFC sector faces intense competition from banks, fintechs, and other NBFCs, along with evolving regulatory frameworks. Compliance costs and changing policies could restrict operational flexibility and increase administrative overhead.
• Exposure to MSME and unsecured loans carries higher credit risk, especially during economic slowdowns or market disruptions, as these segments are prone to higher default rates.
• Fluctuations in interest rates may impact the cost of borrowings and lending spreads. Any difficulty in raising low-cost funds or refinancing existing debt could affect margins and growth plans.
• Expanding geographic reach and loan products requires robust operational controls and risk management. Failures in underwriting, collections, or IT systems could lead to financial losses and reputational damage.