Post listing, the stock touched a low of Rs 265.30 on the BSE and of Rs 265.50 on the NSE. At 10:40 AM; Muthoot Microfin was quoting at Rs 273.75, roughly 6 per cent lower against its issue price. A combined 6.3 million equity shares changed hands on the NSE and BSE.
The company raised Rs 960 crore through initial public offer (IPO). The net proceeds will be utilized to expand the company's business, particularly in the area of onward lending and increase their Tier 1 capital. This expansion is anticipated to align with the growth in the company's business and assets, focusing primarily on onward lending within their lending verticals. Additionally, the utilization aims to ensure compliance with regulatory requirements on capital adequacy as prescribed by the Reserve Bank of India (RBI) from time to time.
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The company has a market leadership with a pan India presence. Also, the company is a part of prestigious Muthoot Pappachan group.
Most of the brokerages have a “Subscribe” rating to the issue owing to strong Brand recall and synergies with Muthoot Pappachan Group; Pan-India presence with emphasis on under-served rural markets; robust Risk Management framework & effective use of technology for streamlining operations; access to diversified sources of capital and Experienced and Professional Management.
However, the microfinance industry in India faces certain risks due to the category of customers that it services, which are not generally associated with other forms of lending. As a result, MML may experience increased levels of nonperforming assets and related provisions and write-offs that may adversely affect the business, financial condition and results of operations.
That apart, the Directorate of Enforcement, Ministry of Finance, Government of India (ED) has issued summons to Managing Director directing him to provide certain information in relation to himself and the company. There is no assurance that the ED will not take any action against the company or Managing Director, which may adversely impact the business and operations, financial condition and reputation, the company said in Draft Red Herring Prospectus (DRHP).