Wed, Dec 5, 2018 3:14 PM
Chautari Laghubitta Bittiya Sanstha Limited has floated 5 lakh unit shares as its initial public offering (IPO). Butwal based microfinance company has floated 9,300 units for the employees of the company, 30,000 units for the mutual funds and remaining 5,60,700 units for the general public.
About the company
Chautari Laghubitta is a microfinance company with working area of 15 districts including Rupandehi, Nawalparasi, Palpa, Dang. Rolpa and others. The main focus of the microfinance company has been to provide banking facilities to the communities which have been away from it.
The company had received certificate of ‘D’ class financial institution from Nepal Rastra Bank on Mangsir 09, 2072. Chautari Laghubitta currently provides the banking services through 51 branches.
About the Issue
Interested applicants can place applications for minimum 50 units and maximum 3,000 units at Rs 100 per share. Applications can be placed through any financial institutions providing C-ASBA services or through Meroshare. The issue will close on Mangsir 23, 2075.
NIBL Ace Capital has been appointed as the issue manager for the IPO issuance of the microfinance company.
ICRA Nepal has assigned Grade 4 rating to the IPO issuance indicating below average fundamentals.
The main objective of the IPO issuance is:
- To make public participation in the capital structure of the microfinance company.
- To raise the capital of the company in order meet the enlisted motives of the company.
- To increase the working area of the company.
Chautari Laghubitta is issuing 6 lakh unit shares which will increase its paid-up capital to Rs 18.60 crore. After the issuance of the IPO, the promoters will hold 67.74% of the total shareholding and ordinary shareholders will hold the remaining 32.26%.
Major shareholders of the microfinance company includes Central Finance Limited with 1.20 lakh unit shares and Kamana Sewa Bikas Bank Limited with 90,000 unit shares.
Chautari Laghubitta has not shown any kind of bonus share distribution through its projected balance sheet as the paid-up capital seems to be constant at Rs 18.60 crore. However, the reserve and surplus of the company is supposed to rise massively after the issuance of IPO.
Deposits, Borrowings and Loans & Advances
The main source of revenue of any financial institution is the deposits and the lending. In case of Chautari Microfinance, the loans and advances have been projected to rise by a huge margin while the deposits and borrowings of the company also rises on a decent pace.
Net worth and Earning per Share
The company has planned to maintain its rate of increment for both Net Worth per Share and Earning per Share. The company’s net worth which stands at Rs 111.72 for the FY 2074/75 has been projected to reach Rs 174.47 at the end of Rs 2077/78. Similarly, the current EPS of Rs 8.15 has been projected to rise to Rs 31.15 after 3 years.
What can be its listing price?
With its net worth per share for the FY 2074/75 standing at Rs 111.72, its listing price can range from Rs 111.72- Rs 335.16. With the use of C-ASBA, the allotment and listing process has been quite efficient so it can be assumed that the shares will be in the secondary market within 3-4 weeks of allotment.
How much to apply?
The public offering of microfinance companies are treated as ‘hot cakes’ in the stock market. The recently issued IPO of Samudayik Laghubitta was oversubscribed by more than 60 times. Similar enthusiasm can be expected from the public in case of Chautari’s IPO issuance as well. So, it is advised to apply for minimum applicable units i.e 50 units.