Asha Laghubitta’s IPO; Things you should know before applying

Nepalese Stock market has 40 listed microfinance companies in total. The market is set to add a new member in the industry i.e. Asha Laghubitta Bittiya Sanstha Limited. The company is issuing 6,74,000 unit shares as its initial public offering (IPO) from Magh 18, 2075.

Know more about the company

Asha Laghubitta Bittiya Sanstha Limited is a microfinance company established under the Companies Act, 2063. Its registered office is located in Kakani-8, Nuwakot. Currently, the company provides microfinance services to through 43 branches. The company has an authorized capital of Rs 30 crore while its issued capital stands at Rs 20.74 crore.

The main investors of the company are Prabhu Investment Pvt. Limited and Nepal Investment Pvt. Ltd holding 2 lakh unit shares each.

As of now, the microfinance company has 4 people as directors representing the promoter shareholders. After the issuance of IPO, 2 directors representing the ordinary shareholders and 1 independent director will also be added.                       

Synopsis of the Issue

As mentioned in the offer letter, the microfinance company is issuing the shares for the expansion of its services and to meet the motives mentioned in its Memorandum of Association and regulations. The company is issuing 32.50% of its total authorized capital as the public offering. 6,74,000 unit shares at par value of Rs 100 includes 10,370 units for the employees of the microfinance, 33,700 units for the mutual funds and remaining 6,29,930 units for the general public.

Prabhu Capital Limited has been appointed as the issue manager for the IPO issuance.

After the issuance concludes, the shareholding structure of the company will look like this:

Paid-up Capital of the company:

The microfinance company’s paid-up capital will reach Rs 20.74 crore after the issuance of IPO. The company has projected it to remain the same till FY 2077/78 i.e. the company has no plans as of yet to provide bonus shares for a coming couple of years.

In the case of the reserve and surplus, the company had reported the reserve to be negative in the FY 2073/74, which has turned its way on a positive route from FY 2074/75. The company projects it to increase continuously until FY 2077/78.

Profit and Loss of the company

Usually, profit and loss of the company give a clear view about the performance of the company in a certain period. Asha Laghubitta has turned its loss of Rs 1.04 crore in the FY 2073/74 to profit of Rs 1.10 crore in the FY 2074/75.

The microfinance company projects the profit of the company to continuously rise in the upcoming fiscal years as well.

Deposits, Borrowings, and Loans

The chart represents the actual as well as projected figures of deposits, borrowings and loans and advances of the microfinance company. The company expects the business to surge by a huge margin along with the issuance of the public offering. The figure of loans and advances as per 2074/75 stands at Rs 1.27 arba which the company has projected to reach Rs 3.13 arba in the FY 2077/78.

Net worth and Earning per share

The EPS of the company has been projected to rise along with the rise in the projected profit of the company. The microfinance company has projected the EPS to reach Rs 32.85 in the FY 2077/78. The net worth has also been projected to reach Rs 123.35 in FY 2077/78 which is largely due to the projected consistent growth of the reserves.

What can be its price when it gets listed?

With its net worth per share for the FY 2074/75 standing at Rs 100.05, the listing price can range from Rs 100.05 to Rs 300.15. Also, the shares will most likely be listed in the secondary market within 2 – 3 weeks of being allotted.

Final Thoughts

Asha Laghubitta can prove a good prospect for both the long-term as well as the short-term investors. The stocks of the microfinance companies have rarely failed in the stock market and Asha Laghubitta is also supposed to perform well in the secondary market. It is advised to apply for minimum units i.e. 10 units as the issue will certainly be oversubscribed on the 1^st day itself.