Arohan Financial Services, founded in 1991, is one of India’s top NBFC-MFIs. In 2006, the company launched its microfinance operation. It works in low-income, underserved areas of the country. Arohan Financial Services provides credit as well as insurance products. The former category comprises income-generating loans and other forms of financial aid, whereas the later category includes life and health insurance products.
Arohan Financial has submitted preliminary documents to SEBI in order to raise Rs. 1750 crore to Rs. 1800 crore. The company’s IPO would feature a fresh issue of Rs. 850 crore and an offer for sale (OFS) of 27,055,893 shares by existing shareholders, according to its DRHP. Qualified institutional buyers (QIBs) will be able to subscribe to up to 50% of the IPO, while retail individual investors will be able to subscribe to up to 35% of the reserved portion. Non-institutional investors will receive 15% of the offering amount.
Additionally, qualifying workers of this company can subscribe to up to 5% of Arohan Financial’s stock.
Arohan Financial Services IPO Objectives
- Fulfillment of general corporate purposes
- Augmenting the capital base
- Prepayment or repayment of the entire or a small part of its outstanding borrowings
Arohan Financial Services IPO Financials
| For the Year/Period Ended | Profit After Tax (in million) | Total Revenue (in million) | Total Assets (in million) | Total Expenses (in million) |
|---|---|---|---|---|
| 30 September 2020 | 625.64 | 5073.93 | 58,131.17 | 4258.83 |
| 31 March 2020 | 1268.01 | 9345.06 | 52,808.21 | 7,669.20 |
| 31 March 2019 | 1,276.40 | 6515.93 | 38,530.97 | 4,744.56 |
| 31 March 2019 | 309.75 | 3278.71 | 23,036.70 | 2804.40 |
Know before investing
Strengths
- In terms of AUM, this company is one of the largest NBFC-MFIs in India. As of 30 June 2020, Arohan’s AUM stood at approximately Rs. 4,862 crores. It has a proven track record of 13 years.
- Arohan Financial has a strong capitalisation profile owing to adequate internal capital generation and equity infusions on a regular basis.
- This company’s management team includes seasoned professionals who have years of experience in the domain of financial services.
- Arohan’s NIM stood at 10.49% of AMA in FY2020, whereas in the previous financial year, it was 11.14%. Operating expenses of this company diminished to just over 4.5% of AMA in FY2020 in comparison to 5.43% in FY2019.
Risks
- Arohan’s portfolio loans in its microfinance segment are unsecured. Moreover, they are backed by group-based social security. Thus, the company has a risky asset class.
- A significant portion of this company’s revenue in FY2020 comprised interest income earned from its microfinance business. Owing to this single-line nature of operations, there is restricted diversification in relation to this company’s revenue stream.
- Arohan Financial Services could experience headwinds due to a lack of operational efficiency or deterioration in the quality of assets. These factors would have a direct impact on this company’s profitability.
- In case Arohan Financials’s adjusted gearing increases on a sustained basis owing to the degradation of its capitalisation profile, it could pose a threat to this company.
Arohan Financial Services Peer Comparison
| Company | Market Capitalisation Growth rate (Last 5 Years) | TTM P/E Ratio | Dividend Yield |
|---|---|---|---|
| Tata Investment Corporation | 129.81% | 37.97 | 2.08 |
| Mannapuram Finance | 160.40% | 10.31 | 0.95 |
| L&T Finance | 5.55% | 10.31 | – |
| Equitas Holdings | -35.16% | 9.39 | 2.30 |
| Shriram Transport Finance | 13.72% | 14.68 | 1.32 |
Arohan Financial Services IPO FAQs:
Q1. What is Arohan Financial Services IPO?
Ans. Arohan Financial Services aims to raise funds worth Rs. 1750 crores to Rs. 1800 crores. Its initial public offering will include a fresh issue worth Rs. 850 crores and an offer for sale (OFS) of 27,055,893 shares by existing shareholders.
Q2. When is the Arohan Financial IPO listing date?
Ans. The listing date of Arohan Financial IPO is yet to be announced.
Q3. When will Arohan Financial Services IPO be open for subscription?
Ans. The IPO subscription date is yet to be announced.
Q4. How will investors receive shares?
Ans. Arohan Financial shares will be credited to your Demat account following the completion of the allotment process.
Q5. Who are the Book Running Lead Managers to this IPO?
Ans. The Book Running Lead Managers of this IPO are ICICI Securities, Edelweiss Financial Services, Nomura Financial Advisory and Securities, along with SBI Capital Markets.
Q6. Who is the registrar for Arohan Financial IPO?
Ans. The registrar to this issue is Link Intime India Private Limited.
Q7. What is the minimum lot of Arohan Financial IPO?
Ans. The lot size of this IPO is yet to be announced.
Q8. What are the different categories of investors that can participate in Arohan Financial IPO?
Ans. Retail individual investors, qualified institutional buyers, and non-institutional investors can subscribe to this IPO. The issuer has allotted a portion for eligible employees as well.
Q9. What type of issue will Arohan Financial IPO be?
Ans. Arohan Financial IPO will be a book-built type of issue.
Q10. Can I apply for the Arohan Financial IPO if I don’t have a UPI ID?
Ans. If you do not have a UPI ID, you can easily create one with any of the UPI Handles present on the NPCI list. Moreover, you can also apply for the Arohan Financial IPO with the help of the ASBA facility of your bank or with physical forms.
Q11. Where to find my UPI ID?
Ans. Usually, you can find your UPI ID in the Profile section of the app you are using. You can click here to check how to locate UPI IDs for some of the popular UPI apps.
Q12. When can I receive the UPI mandate request after I place an order?
Ans. You will get a UPI mandate request 15-20 minutes after bidding for an IPO on the app. There might be a delay sometimes.
Q13. Why can’t I apply for the Arohan Financial IPO using my UPI ID?
Ans. To apply for the Arohan Financial IPO via UPI, your UPI ID/Handle has to be approved by NPCI. So, if you can’t apply for the IPO, make sure to check the list of banks that are approved by NPCI to provide UPI service for IPO.
Q14. How can I approve my Arohan Financial IPO mandate request?
Ans. You can approve your IPO mandate request through your UPI app.
Q15. Will I be able to submit more than one IPO applications?
Ans. You can apply for only 1 IPO application with the same PAN. If you try to apply for multiple IPO applications with your PAN through different platforms, the allotment will be cancelled.
Q16. Within what time should I approve the UPI mandate request?
Ans. You are allowed to approve the UPI mandate request any time before 12 am of the next working day after the IPO closes. However, make sure to approve the mandate request just as you receive it.
Q17. What is the cut-off price and why is it important to apply at the cut-off price?
Ans. The price at which the shares are issued to the investors during an IPO is the cut-off price. It is usually determined at the allotment stage of the IPO. Ideally, all retail investors bid at the cut-off price in order to increase their chances of allotment. When investors apply at the cut-off price, it means they would be bidding at this particular price.
Q18. Can I apply for the Arohan Financial IPO with a current account?
Ans. It is advised to apply for the Arohan Financial IPO using the savings account. This is because most banks usually do not process IPO applications that are submitted through a current account. However, you can contact your bank for more information.
Q19. My account did not get debited even after I applied for an IPO. Why so?
Ans. Your bank will hold/block the amount of money when you apply for an IPO. The amount will be debited only when the shares are allotted. In case the shares aren’t allotted, the amount will be released to your account before the UPI mandate expiry date.
Q20. How to modify my Arohan Financial IPO bid?
Ans. You can modify the UPI ID or the lot size after you have placed your order. But, you must know that if you have already approved your UPI mandate request for the order, and then modify the order, the IPO bid amount will be blocked, along with the amount blocked for the original bid. You will be receiving another UPI mandate request for the modified bid. In case you don’t approve the previous mandate request, the amount for the original bid will not be blocked.
Q21. When will the funds get blocked or unblocked?
Ans. Your funds will be blocked just as you approve the mandate request for your Arohan Financial IPO application. However, if you do not obtain any shares during the allotment, your funds will be unblocked on or before the UPI mandate expiry date. If the fund is not unblocked post this date, you should approach your bank.
