Akme Fintrade
IPO Size: Rs. 132 cr
- Entirely Fresh Isse to augment capital base
Price band: Rs. 114-120 per share
M cap: Rs. 512 cr, implying 26% dilution
IPO Date: Wed 19th Jun to Fri 21st Jun 2024, Listing Wed 26th Jun 2024
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Small Business Loan Provider
Akme Fintrade is an Udaipur headquartered NBFC, providing SME/business loans, two and four-wheeler loans in Rajasthan, Madhya Pradesh, Gujarat and Maharashtra. Assets under management (AUM) stood at Rs. 379 cr as of 31.12.23, with 80% comprising business loans, and balance vehicle loans. Operating as ‘Aasaan Loans’, company has 12 branches and 25 touch-points.
De-Growing Business
In past 3 years, AUM has declined 10% from Rs. 421 cr as of 31.3.21 to Rs. 379 cr as of 31.12.23. Even number of customers has shrunk 27% during this period, from 45k in FY21 to 33k in 9MFY24. This has also reduced revenue from Rs. 86 cr in FY21 to Rs. 65 cr in FY23 and to Rs. 52 cr in 9MFY24. PAT of Rs. 12 cr was clocked in 9MFY24, leading to an EPS of Rs. 3.9.
Nothing Good to Talk About
Net NPA of 1.9% is very high, reflecting weak underwriting skills. On Rs. 195 cr gross borrowings, credit rating has dropped 4 notches in past 2 years to BBB (Stable) currently, from BB+ in Jun 2022.
Expensively Priced Micro-Cap Stock
On net worth of Rs. 217 cr, as of 31.12.23, book value per share (BVPS) was at Rs. 68. Post-money BVPS is Rs. 82, leading to PBV of 1.4x, which is very aggressive for company’s size and de-growing performance.
Moreover, in Dec 2022, company raised Rs. 44 cr at Rs. 80 per share. In last 1.5 years, company performance has not improved 50% to justify the premium to the last transaction price in the current IPO.
A Word of Caution
Current promoter holding of 56% will shrink to 42% post IPO and we do not rule out price action in the stock, beyond fundamentals. Group company BSE-listed Star Housing Finance, with current m cap of Rs. 444 cr, saw its sharp price halve from Rs. 82 in Nov 2023 to Rs. 40 in Mar 2024, when company’s profit was growing and broader markets also scaling new peaks. Thus, be careful with your money, especially in bull-market. Besides, a slew of IPOs are expected going forward, hence there are no dearth of opportunity.
