Au financiers Limited are non-banking finance company (“NBFC”) who serves mainly low and middle income individuals and businesses. Au financiers Limited are coming up with an IPO. They are going to introduce their initial public offer which will hit the primary market on 28th June 2017 and closes on 30th June 2017. The company aims to raise around Rs. 1912 crore by offering shares at Rs.355 – Rs.358 per Equity Share. Out of 1912 crore up to 1,000,000 equity shares are reserved by employees, so basically issue size is 1876.74 crore.
Au financiers Limited was originally incorporated as ‘L.N. Finco Gems Private Limited’ on January 10, 1996. Au financiers Limited are Jaipur, Rajasthan based firm. They are a non-banking finance company (“NBFC”) who mainly provides services to the people of low and middle class along with small businesses those have limited or no access to formal banking and finance channels.
Au financiers Limited works in three business lines which are:
- Vehicle finance – They divide the vehicles finance into several categories of vehicles:
- small commercial vehicles
- light commercial vehicles
- medium and heavy commercial vehicles
- three wheelers
- Construction equipment.
They also finance the purchase of pre-owned vehicles. Loan tenures for their vehicle finance loans are up to five years.
- Micro, small and medium enterprises (“MSMEs”) loans- As part of their MSME loans business, they primarily extend loans to micro and small manufacturing firms, service enterprises and traders. Loan tenures for their MSME loans are up to 12 years.
- Small and medium enterprises (“SMEs”) loans- Their SME loans business extends loans to several types of small and medium sized businesses including HFCs and MFIs. Loan tenures for their SME loans are up to 15 years.
They are categorized as a “Systemically Important, Non-Deposit Accepting Asset Finance Company” (NBFC-ND-AFC) by the Reserve Bank of India. They received a license from the RBI to set up a ‘small finance bank’ (“SFB”) on December 20, 2016 and they are the only NBFC categorized as an asset finance company to obtain such license.
They operate their operations through 300 branches spread across 10 states and one union territory in India, with significant presence in the states of Rajasthan, Gujarat, Maharashtra and Madhya Pradesh and employed 6,092 personnel serving 270,692 active loan accounts till December 31, 2016.
They have access to diverse sources of liquidity, such as term loans and working capital facilities, proceeds from loans assigned and securitized, proceeds from the issuance of non-convertible debentures (“NCDs”) and commercial paper, and subordinated debt borrowings from banks, mutual funds, insurance companies and other domestic and foreign financial institutions to meet their funding requirements.
- Diversified Product Portfolio and Revenue Streams
- Customer Centric Organizational Commitment
- Significant Presence in Rural and Semi-Urban Markets with Focus on Low and Middle Income Customers
- Robust and Comprehensive Credit Assessment and Risk Management Framework
- Access to Diversified Sources of Funding over the Years
- Experienced Management Team and Qualified Operational Personnel.
- Leverage Existing Capabilities and Customer Base as they Transition into a Retail Focused SFB
- Grow SFB Branch Network in Our Existing Markets
- Provide a Comprehensive Suite of Banking Services
- Leverage Technology to Grow Business
- Enhance Brand Presence
Objects of the Issue:
The objects of the Offer are as follows:
1. To achieve the benefits of listing the Equity Shares on the Stock Exchanges and
2. For the sale of up to 53,422,169 Equity Shares by the Selling Shareholders.
Financial and Competition Analysis
The revenue has been Rs. 229.85 cr. (FY12), Rs.410.65 cr. (FY13), Rs 565.5 cr. (FY14), Rs 687 cr.(FY15), 1046.9 cr.(FY 16), 1430 cr.(FY17) growing at a CAGR of 46% over a four year period. The profit has been Rs. 37.28 cr. (FY12), Rs.69.35 cr. (FY13), Rs 72.54 cr. (FY14), Rs 139.45 cr.(FY15) and 247.15 cr.(FY 16) and 842 cr.(FY17). The FY 17 profit consist of exceptional income of 670 Cr. It EPS is Rs 11.7 excluding exceptional item based on which the P/E multiple they are asking for is 30.6 ( 358/11.7).
Capital First can be compared to AU financial and they have a multiple of around 28.58. So the IPO seems to be fully priced.
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