SK Finance IPO

About SK Finance Limited IPO

SK Finance Limited IPO is an IPO of ₹2,200 crores. It consists of an offer for sale aggregating up to ₹1,700 crores and a fresh issue aggregating up to ₹500 crores. The shares will be allotted on TBA. The credit of shares to the demat account will take place on TBA and the initiation of refunds will take place on TBA.

Objective of SK Finance Limited IPO

• Augmenting their capital base to meet future business requirements towards onward lending and

• General Corporate purposes.

Industry Outlook

According to the CRISIL Report, the overall vehicle financing segment in India stood at approximately ₹11,85,000 crores as of fiscal 2023, witnessing a CAGR of around 11.07% from fiscal 2019 and going forward, the outstanding credit is expected to grow at a CAGR of 16-18% from fiscal 2023 to fiscal 2027 to reach approximately ₹21,00,000 crores.

Company Information

SK Finance Limited is a non-deposit taking non-banking finance company, a middle layer (NBFC ML), operating in two verticals: vehicle financing and financing for Micro, Small and Medium Enterprises (MSME). In their vehicle financing vertical, they primarily have a secured, granular and retail loan portfolio for financing used and new commercial vehicles (excluding medium and heavy commercial vehicles) (CVs (excluding M&HCVs)), cars and tractors as well as new two-wheelers. The MSME lending business primarily caters to these businesses' working capital requirements. These loans are fully backed by assets and are offered primarily to generate income, to the mid to low-income category of customers that are predominantly self-employed, unbanked or underbanked individuals in the rural and semi-urban areas of India with limited access to organized lending channels.

Risks of SK Finance Limited IPO

• Their business is primarily focused on used vehicle financing and any adverse development in this sector or in government policies affecting this industry could affect their business, cash flows and results of operations.

• The risk of non-payment or default by their customers may adversely affect their business, financial condition, cash flows and results of operations.

• They are exposed to risks that may arise if their customers opt for balance transfers to other banks or financial institutions.

Anchor Investor Information

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

IPO Registrar and Book Running Lead Managers

Book running lead managers: Kotak Mahindra Capital Company Limited Jefferies India Private Limited Motilal Oswal Investment Advisors Limited Nomura Financial Advisory and Securities (India) Private Limited

Registrar for the IPO is KFin Technologies Limited

Business Model

The company earns its revenue through the following sources:

• Vehicle financing.
• Financing for Micro, Small and Medium Enterprises (MSME).

Company Growth Trajectory

As of December 31, 2023, the company had a distribution network of 535 branches in 11 states and one union territory. Out of 535 branches, they provide secured business loans to the MSME sector through 322 branches in eight states and one union territory, as of December 31, 2023, and they plan to gradually provide MSME financing from their existing untapped branch network. They source their customers through two channels for their vehicle financing vertical – direct channel, i.e., through their on-ground sales teams, and the indirect channel of a well-diversified base of direct sales agents (DSAs). As of December 31, 2023, out of 10,725 employees, 6,202 employees and 1,607 employees were part of their sales and collection team, respectively for their direct channel. Further, they had 8,853 DSAs in their network as of December 31, 2023. 100.00% of sourcing for MSME financing vertical is done through their direct channel i.e., their on-ground sales team. Their revenue from operations rose from ₹638.088 crores in FY 21 to ₹1,210.522 crores in FY 23. Their profit after tax also increased from ₹910.83 crores in FY 21 to ₹ 222.786 crores in FY 23.

Company Market Position

According to the CRISIL Report, they are the fastest growing player in the vehicle financing segment and the MSME financing segment among their peers analysed, based on their assets under management (“AUM”) CAGR in the respective segment for the period between fiscal 2021 and fiscal 2023. Also, according to the CRISIL Report, among the peers considered, for the nine months that ended as on December 31, 2023, the company had the highest used vehicle finance share of 77.41% as part of its vehicle financing portfolio. In addition, they have identified specific businesses in the MSME sector to which they offer loans.

How To Check Allotment Status of SK Finance Limited IPO?

You can check the allotment status of shares either on the website of the Bombay Stock Exchange (BSE) or on the website of the registrar KFin Technologies Limited. To check the status on the BSE website:

• Visit the BSE 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 SK Finance 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 KFin Technologies Limited website
• Choose “Public Issues” from the “Investor Services” drop-down
• Select SK Finance Limited from the drop-down
• Enter your PAN number or Application number
• Click on “Submit” to know the allotment status