IPO Details
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IPO Size
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Schedule of SK Finance Ltd IPO
Start date
End date
Allotment of bids
Refund Initiation
Listing on exchange
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
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Augmenting their capital base to meet future business requirements towards onward lending and
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General Corporate purposes.
SK Finance Limited IPO Valuation
| Detail | Information |
|---|---|
Upper Price Band (₹) | TBA |
Existing Shares to be Sold | Aggregating up to ₹1,700 crores |
Fresh Issue | Aggregating up to ₹500 crores |
EPS (₹) For the year ended March 31, 2023 | 19.13 |
SK Finance Limited IPO Share offer and Subscription Details
| Investor Category | Shares Offered |
|---|---|
QIBs Share Offered | Not more than 50% of the Issue |
Non-Institutional Bidders (NIBs) | Not less than 15% of the Issue |
Retail Individual Bidders | Not less than 35% of the Issue |
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.
SK Finance Ltd Strengths
They are the fastest growing player in the Vehicle & MSME finance segment among the peers analysed, with a growing presence in the underpenetrated used CVs (excluding M&HCVs) and MSME financing segment (CRISIL Report).
The company’s vehicle financing vertical, which constituted 78.03% of its total AUM for December 31, 2023, grew at a CAGR of 41.07% between fiscals 2021 and 2023. According to the CRISIL Report, they are the fastest growing player among the peers analysed in the vehicle financing segment, based on their vehicle financing AUM CAGR between fiscal 2021 and fiscal 2023.
A deep sales network enabling access to a large demography of customers in the rural and semi-urban areas of India, supported by a mix of direct and indirect sourcing channels
They have a growing sales network that caters to customers primarily in the rural and semi-urban areas of India. According to the CRISIL Report, as of fiscal 2023, semi-urban and rural regions accounted for approximately 29% and 24% share of the overall vehicle financing credit in India, respectively. As of December 31, 2023, they had 535 branches in 11 states and one union territory. Out of 535 branches in 11 states and one union territory, they provide secured business loans to the MSME sector through 322 branches in eight states and one union territory, as of December 31, 2023.
Comprehensive systems and process for underwriting, collections and risk management
They have a customer-centric model whereby their underwriting process has been built on three key pillars,i.e., income, intent and insurance. This framework helps them to mitigate risk and underwrite new loans while maintaining their asset quality.
Diversified sources of funding backed by broad borrowing mix and lender base.
Their ability to access diversified sources of funding has been a key contributor to their growth. As of December 31, 2023, they access funds from 61 lenders, including nine public sector banks, 25 private banks, four mutual funds and 23 financial institutions.
Risks of SK Finance Limited IPO
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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.
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The risk of non-payment or default by their customers may adversely affect their business, financial condition, cash flows and results of operations.
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They are exposed to risks that may arise if their customers opt for balance transfers to other banks or financial institutions.
All Financial Information about SK Finance Ltd
Particulars (in Rs. Crores)
Particulars (in Rs. Crores)
Comparison with peers
| Parameter | SK Finance Limited | Shriram Finance Limited | Cholamandalam Investment and Finance Company Limited |
|---|---|---|---|
Total Income for the year ended March 31, 2023 (₹ in crores) | 1314.241 | 30508.390 | 13105.590 |
P/E | - | 15.7 | 36.2 |
EPS (Basic) (₹) | 19.13 | 160.54 | 32.44 |
Return on Net Worth (%) | 13.01% | 14.84% | 20.41% |
NAV per share (₹) | 155.53 | 1,162.12 | 174.52 |
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.
SK Finance Limited Company Profit & Loss
| Parameter | FY21 | FY22 | FY23 |
|---|---|---|---|
Total Income (₹ crores) | 682.492 | 820.687 | 1314.241 |
Profit Before Tax (₹ crores) | 290.209 | 177.603 | 123.416 |
Net profit / (loss) (₹ crores) | 91.083 | 142.874 | 222.78 |
EBITDA (₹ crores) | 431.762 | 540.232 | 862.892 |
EPS (₹) | 9.04 | 12.62 | 19.13 |
SK Finance Limited Company Cash Flow
| Parameter | FY21 | FY22 | FY23 |
|---|---|---|---|
Profit before tax (₹crores) | 123.416 | 177.603 | 290.209 |
Net Cash from Operating Activities (₹ crores) | (370.651) | (1228.153) | (2243.403) |
Net Cash from Investing Activities (₹ crores) | (122.058) | (576.018) | 280.844 |
Net Cash from Financing Activities (₹ crores) | 663.655 | 1745.415 | 2545.487 |
Cash and Cash Equivalents (₹ crores) | 233.315 | 174.559 | 757.487 |
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
How To Apply for SK Finance Ltd IPO?
Here are the steps to apply for SK Finance Ltd IPO:
Step 1: Log in to your Kotak Securities Demat account Log in to your Demat account to access IPO investments. Next, select the current IPO section.
Step 2: Specify IPO details Enter the number of lots and the price you wish to apply for.
Step 3: Enter UPI ID After entering your UPI ID, click submit. This will place your bid with the exchange.
Step 4: Mandate Notification Your UPI app will receive a mandate notification to block funds.
Step 5: Approve Request Your funds will be blocked once you approve the mandate request on your UPI.
This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI-prescribed Combined Risk Disclosure Document before investing. Brokerage will not exceed SEBI’s prescribed limit.
SK Finance Ltd IPO FAQs
What is the SK Finance Limited IPO?
The SK Finance Limited IPO has an issue size aggregating up to ₹2,200 crores. The IPO opens for subscription on TBA and closes on TBA.
Who is the Registrar for SK Finance Limited IPO?
KFin Technologies Limited is the registrar for this IPO.
Where can I read more about SK Finance Limited business?
You may read more about SK Finance Limited and its IPO from the company’s draft red herring prospectus (DRHP) here
