Fedbank Financial Services Ltd IPO 

Last Updated on October 17, 2023 by BFSLTeam BFSLTeam

Fedbank Financial Services Ltd, also known as FedFina, has filed its initial papers with the market regulator SEBI to launch an IPO. This IPO will consist of both a fresh issue of shares and an Offer for Sale. Through the fresh issue worth Rs. 750 crore, the company will gather funds to enhance its Tier-I capital base and meet future capital needs. In addition, there will be an OFS totalling up to 70.3 million equity shares by promoters and existing shareholders.

FedFina caters to the financial needs of MSMEs and self-employed individuals. It has 463 branches and offers gold loans, loans against property, home loans, and business loans. It received its licence from RBI to function as an NBFC in 2010. 

Fedbank Financial Services Ltd IPO is yet to be launched. Gather knowledge about the company and more to make a sound investment decision. 

About Fedbank Financial Services Ltd

Fedbank Financial Services is a Non-Banking Financial Company (NBFC) focused on the retail sector and promoted by The Federal Bank. It also has the fastest growth among gold loan NBFCs in India as of March 31, 2021. It is one of 5 private bank-promoted NBFCs in India and boasts the minimum borrowing cost among MSMEs and other contemporary companies in India for the fiscal year 2021.

As of March 31, 2021, it stands as the third-fastest-growing NBFC in terms of Assets Under Management (AUM) in the past three fiscal years in India with a Compound Annual Growth Rate (CAGR) of 49% between fiscals 2018 and 2021.

With its tailored products including housing loans, gold loans, loans against property, and unsecured business loans, the company targets the largely underserved segment of emerging self-employed individuals and micro, small, and medium enterprises in India.

The NBFC has a strong presence in 15 states and union territories in India, with a focus on southern and western regions. It has received excellent ratings such as “AA-” by India Ratings and Research Private Limited for its NCDs and long-term bank facility and “AA-” by CARE in terms of its non-convertible debentures for 5 consecutive years instilling trust among stakeholders.

Company Financials 

Refer to the following table for the financial details of Fedbank Financial Services Ltd. 

Parameters as of the Year Ending On	March 31 2021	March 31 2020	March 31 2019
Total Assets	54,663.05	40,861.90	21,506.12
Total Liabilities	46,315.71	33,950.28	16,919.87
Total Expenses	6,206.38	4,100.22	2,047.22
Total Revenue	6,975.66	4,660.18	2,555.37
Profit After Tax	616.84	391.36	361.34
EBITDA	4,173.88	2,763.11	1,725.01
Earnings Per Share (EPS) (Basic) *	2.19	1.61	1.76
Earnings Per Share (EPS) (Diluted) *	2.18	1.61	1.76

*Values in INR millions except EPS 

Also Read: How To Apply For An IPO?

Strengths OF Fedbank Financial Services Ltd

Here are some noteworthy facts about the strengths of Fedbank Financial Services: 

• As of 30 September 2021, this NBFC has been active in 15 Indian states and UTs. It has a firm presence in the western and southern regions, accounting for more than 75% of the country’s GDP as of 31 March 2020. 
• Fedbank operates a unique business model known as the “twin engine” focusing on ESEI and MSME instalment loans as well as gold loans. This approach helps to hedge against economic swings, with ESEI and MSME demand driving growth during upswings and gold loan demand supporting growth during downturns.
• The company had 463 branches in 136 districts, strategically located in states like Andhra Pradesh (including Telangana) and Rajasthan, which exhibits excellent asset diversification.
• According to a CRISIL report, Andhra Pradesh and Rajasthan ranked fourth and fifth in credit growth between fiscal years 2016 and 2021. The organisation’s diversified presence in these regions allowed exposure to various local markets and products.

Risks Involved 

Along with the driving factors behind FedFina’s growth, there are some underlying risks that pose serious threats to its growth and finances. Here are a few of them: 

• The company’s business and operations are largely dependent on prompt access to sources of financing. Any funding disruption could adversely impact the business, financial condition and operational outcomes. 
• The NBFC faces significant risk due to its high concentration of loans to emerging self-employed (“ESEI”) and small and medium-sized enterprises. Failure to pay or default by debtors could adversely affect its business and revenue generation.

Summary 

The NBFC had previously filed its draft papers with SEBI, but it didn’t find the market conditions favourable for launching an IPO. This is the financial institution’s second attempt at launching an IPO. Fedfina IPO price and lot size are yet to be announced. You can check this site for the latest updates on the same. Fedbank Financial Services Ltd’s IPO date has not been announced as well. 

Also Read: Benefits of Investing in IPO

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