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SBFC Finance IPO opens tomorrow: India has witnessed a sharp rise in initial public offerings (IPOs) so far this year, with the primary market undoubtedly witnessing some excellent listings in both main board and SME IPOs. July was also a very busy month for investors and traders, who were not only tracking the macroeconomic events but also the primary market.
Two mainboard issues, SBFC Finance IPO and Concord Biotech IPO, will begin to accept subscriptions as we head into the first week of August. While SBFC Finance IPO opens for bidding tomorrow, August 3, Concord Biotech IPO launches on August 4. Investors are hoping for the next top IPO that will repeat the performance after seeing stellar listing gains in Utkarsh SFB, IdeaForge, and Cyient DLM.
Considering both the companies are from different industries where one is non-banking finance company (NBFC), while the other is research & development-driven biopharma company, mostly analysts are bullish on both but have there own top picks.
Given that the two businesses are from two different sector, where SBFC Finance IPO is a non-banking finance company (NBFC), while Concord Biotech IPO is a research & development biopharma company, most analysts are bullish on both, even though they have their own top picks.
Also Read: Yatharth Hospital IPO Allotment: GMP, how to check allotment status
Some analysts believe that the SBFC Finance IPO issue is more promising than other listed peers since it offers the potential for a healthy listing gain based on SBFC Finance’s valuations and has a more reasonable ask price.
While some analysts believe Concord Biotech’s issue to be more promising as they believe the company’s business model to be very unique as they are one of a kind and into the fermentation process of API development. According to analysts, Concord Biotech has loyal customers all over the world, and they have plants registered in numerous countries. Their enhanced capacity complements the IPO fund very well. The company will continue to grow well in the future. They are involved in the formulation of Active Pharmaceutical Ingredients (API), CDMO, and expanding into the injectable market. Their capacity has more than doubled.
Lets take a look at key details of SBFC Finance IPO and Concord Biotech IPO;
SBFC Finance IPO
SBFC Finance IPO opens for subscription on Thursday, August 3, and closes on Monday, August 7. The company has fixed the price band at ₹54 to ₹57 per equity share for the proposed initial public offer. The allocation to anchor investors for SBFC Finance IPO is scheduled to take place on Tuesday, August 2.
SBFC Finance IPO comprises of fresh issuance of equity shares worth ₹600 crore and an offer for sale (OFS) of ₹425 crore, according to the Red Herring Prospectus (RHP). The total offer size of SBFC Finance IPO now is ₹1,025 crore.
Also Read: SBFC Finance IPO: Latest GMP, price band, risks, and other key details
Concord Biotech IPO
Concord Biotech IPO opens for subscription on Friday, August 4, and closes on Tuesday, August 8. The company has fixed the price band at ₹705 to ₹741 per equity share of face value of ₹1 each.
Rekha Jhunjhunwala-backed Concord Biotech IPO consists of a pure offer-for-sale by Helix Investment Holdings Pte Ltd. of up to 20.93 million shares. The issue offer is priced at ₹1,550 crore on the upper band, and the firm is worth ₹7,752 crore.
Also Read: Concord Biotech IPO: Jhunjhunwala-backed Concord IPO sets price band at ₹705-741
SBFC Finance IPO versus Concord Biotech IPO: Here’s what analysts say
SBFC Finance IPO
According to Vinit Bolinjkar, Head of Research, Ventura Securities SBFC Finance is a business that focuses on the Micro, Small & Medium Enterprises (MSME) sector, with a pan-Indian presence and a well-diversified network of customers. Hence, they are protected against geographic risk because they do not have any concentration in any state.
Second they have reduced credit exposure to individual customers resulting in a more granular portfolio thereby spreading risks across a large pool of customers.
“We anticipate that SBFC can grow 5-6% points higher that the overall credit grow of 25% cagr over the next few years.
Assuming marginal deterioration in asset quality we value SBFC at 1.9x fy26 adj P/BV. We expect a conservative PT of 75/share over the next 24 months,” added Bolinjkar.
Also Read: Vinsys IT Services IPO gets fully subscribed. GMP, review, subscription status, other details in 10 points
Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities, believes that SBFC Finance IPO offer gives a great opportunity to invest in one of the well diversified pan India and fastest growing MSME business loan providers with a high focus on underserved and underbanked customers with ticket size in the range of ₹5 lakhs to ₹30 lakhs.
“We like the way SBFC has built systems, processes and customer assessment methods in acquiring retail loan books in the overcrowded MSME space which resulted in healthy portfolio quality indicators such as low rates of Gross NPAs and Net NPAs in the peers.
On valuation parse at upper band of ₹57- the issue is asking for a Market Cap of Rs.6066 Cr with the price to book value at around 3.5x which is slightly below industry average of 4x, leaving something on table for new investors via IPO. We advocate our optimistic view on SBFC Finance on the back of an experienced, cycle-tested and professional management team and recommend investors ‘Subscribing’ to the IPO with a long term perspective as well as healthy listing gains. With optimistic market sentiments if investors get any listing gains over and above 25%, we recommend booking profits on the listing day,” added Tapse.
Concord Biotech IPO
Bolinjkar said that Concord Biotech is a company based on fermentation, in contrast to normal API producers who employ a chemical approach for synthesis. Because they are a specialised process manufacturer with exposure to therapies including immunosuppressants and oncology as well as ventures into formulations, CDMO, and injectable sectors, we think they will be able to maintain high margins. Over the next two to three years, topline growth is anticipated to be at least 50%.
“We expect that the company will maintain its specialised margins and that return on invested capital (ROICs) or return ratios will increase from the current levels to 40%. As a result, we believe the stock merits a higher valuation, and if we value the firm at 25 times FY26 earnings, we will see a 22% increase in the stock’s value over the following 24 months,” explained Bolinjkar.
Similarly Tapse too is impressed with the business dynamics with presence across the complex fermentation value chain such as R&D, patents, key starting materials, API and formulation manufacturing, as well as marketing and distribution of fermentation-based products.
“On valuation parse at upper band of ₹741/- the issue is asking for a market cap of ₹7,752 crore with the price to book value at around 6x and PE of 32x which looks slightly higher and expensive in the industry as on date, hence assuming current financials the issue appears to be fully priced-in discounting near term triggers. Investors should also consider the issue being a purely secondary (OFS) issue which is an exit route to Helix Investments, where in post issue concord Biotech is not receiving any funds for any growth capital.
Hence we remain a bit cautious on the OFS IPO offers and advice only risk seeking investors to ‘Subscribe’ to the IPO with a long term perspective while the ongoing optimistic market sentiments if investors get any listing gains over and above 25%, we also recommend allotted investors to book profits on the listing day,” said Tapse.
Also Read: Oriana Power IPO: GMP, price band, subscription status, and other key details
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