Finbud Financial Services Ltd

About Finbud Financial Services Limited IPO

Finbud Financial Services Limited IPO is an IPO of TBA. It consists of a fresh issue of up to 50,48,000 equity shares. The shares will be allotted on a date that is yet to be announced. The credit of shares to the demat account will take place on a date TBA. The basis of allotment will take place on a date TBA, and the initiation of refunds will take place on TBA.

Objective of Finbud Financial Services Limited IPO

• Infrastructure development.
• Working capital requirement.
• Investment in wholly owned subsidiary i.e. LTCV Credit Private Limited.
• Investment in customer acquisition.
• Investment in data analytics.
• Investment in digital lending and cloud software.
• Prepayment or repayment of a portion of certain outstanding borrowings availed by the company.
• General corporate purposes.

Industry Outlook

In recent years, India has experienced a rise in fintech and microfinancing. India’s digital lending stood at US$ 7,500 crores in FY18 and is estimated to reach US$ 1,00,000 crores by FY23 driven by a five-fold increase in digital disbursements. The Indian fintech market has attracted US$ 2,900 crores in funding over 2,084 deals so far (January 2017- July 2022), accounting for 14% of global funding and ranking second in terms of deal volume. By 2025, India's fintech market is expected to reach ₹ 6,20,000 crores.

Company Information

Finance Buddha is a prominent retail loan aggregation platform in India that helps people get personal loans, business loans, and home loans from banks and non-banking financial companies. The company acquires customers through a hybrid strategy using digital marketing and through a wide network of external agents to reach out to prospective borrowers. Once the intent of the customer has been established, the company uses its matchmaking capabilities to advise the customer on the best-suited product for their needs by allowing them to compare prospective loan offers across multiple lending institutions and handhold them through the entire loan documentation process until the final disbursement is processed. In simple terms, Finance Buddha’s agent model focuses on reaching a large number of customers with lower profits per loan while its digital model focuses on fewer customers but with higher profits. This balanced approach allows the company to grow and stay profitable in the long term.

Risks of Finbud Financial Services Limited IPO

• Their business is heavily reliant on agent channel sales, which constitute a significant portion of their total revenue. Any disruption to agent channel sales operations, changes in consumer preferences, or inability to effectively grow their digital channel sales could have a material adverse effect on their business, financial performance, results of operations, and future growth prospects.

• Concentration risk that arises from dependency on a few key lending partners may adversely affect their business.

• Their business is subject to seasonality. Lower revenues in the festive period of any fiscal may adversely affect their business, financial condition, results of operations, and prospects.

Anchor Investor Information

The Anchor Investor Bid/Issue Period shall be one Working Day prior to the Bid/Issue Opening Date.

IPO Registrar and Book Running Lead Managers

Book running lead managers:

SKI CAPITAL SERVICES LIMITED

Registrar for the IPO is Skyline Financial Services Private Limited

Business Model

The company earns its revenue through the following sources:

• Personal Loans: Unsecured loans primarily targeted at salaried individuals, with an average ticket size of around INR 0.1 crore. This segment forms the largest part of the company’s revenue from the agent channel.

• Business Loans: Unsecured loans provided to SMEs with an average ticket size of INR 0.2 crore. This segment contributes significantly to the company’s overall revenue.

• Home Loans: Secured loans for purchasing homes or mortgaging existing properties, serving both individuals and SMEs.

Company Growth Trajectory

Today, the company operates across India, covering over 19,000 postal areas. Its business has experienced significant growth in its early days. The company’s revenue from operations has increased from ₹ 88.120 crores in FY 22 to ₹135.478 crores in FY 23 and ₹190.272 crores in FY 24. This growth represents a Compound Annual Growth Rate (CAGR) of approximately 29.25% over the past three years.

Company Market Position

The industry’s low entry barriers and rapid growth attract numerous new entrants, suggesting that competition is likely to increase. Despite this, their extensive experience in financial services, commitment to quality assurance, and strong reputation position them favourably. Key factors influencing their competitive position include maintaining robust client relationships, upholding their reputation, and consistently delivering high-quality services at competitive prices.

The company’s hybrid business model also allows it to cater to a wide range of customers, from those preferring traditional methods to digitally savvy consumers. The company’s extensive agent network and digital marketing capabilities provide a competitive edge in acquiring and retaining customers. Moreover, the company’s partnerships with lending institutions, including major banks and NBFCs, further strengthen their market position.

How To Check Allotment Status of Finbud Financial Services Limited IPO?

You can check the allotment status of shares either on the website of the National Stock Exchange (NSE) or on the website of the registrar Skyline Financial Services Private Limited. To check the status on the NSE website:

• Visit the NSE website
• Click on “Investor Services” and choose “Application Status Check”
• Choose the issue type — Equity or Debt (Equity in this case)
• Select the Issue Name from the drop-down. The issue name is the company’s name, which is Finbud Financial Services Limited
• Enter your application number or PAN number
• Check the box which says “I’m not a Robot” and click on “Search” to know the allotment status

Follow these steps to know the allotment status on the registrar’s website:

• Visit the Skyline Financial Services Private Limited website
• Choose “Public Issues” from the “Investor Services” drop-down
• Select Finbud Financial Services Limited from the drop-down
• Enter your PAN number or Application number
• Click on “Submit” to know the allotment status