Care Ratings Nepal Ltd has assigned grading of CARE-NP IPO Grade 4 to the proposed Initial Public Offer (IPO) of Infinity Laghubitta Bittiya Sanstha Ltd. (ILBSL). CARE-NP IPO Grade 4 indicates below average fundamentals.
CRNL assigns IPO grades on a scale of Grade 1 to Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals. CRNL‟s IPO grading is an opinion on the fundamentals of the issuer. The grade assigned to any individual issue represents a relative assessment of the fundamentals‟ of the issuer.
ILBSL proposes IPO issue of6 lakh equity shares of face value of Rs.100 each at par aggregating Rs.6 crore.
The grading is constrained by short track of operations; concentrated resource profile with high dependence on Banks & Financial Institutions; concentrated product portfolio distribution; exposure to the regulatory risks related to the microfinance industry and inherent risk involved in the microfinance business including socio political interventions.
However, the grading draws strength from ability of the company to increase its scale of operations along with improving its profitability; Comfortable Capital Adequacy ratio; adequate geographical diversified reach in its area of operation; controlled and low Non Performing loans (NPLs) and comfortable liquidity profile.
Ability of the company to scale up the operations while maintaining the capital adequacy levels and asset quality and ability of the company to manage the impact of any regulatory changes by NRB would be the key rating sensitivities.