Things to Know Before Applying for IPO of Dhaulagiri Laghubitta; IPO Opens Today For General Public
Tue, Aug 9, 2022 6:37 AM on IPO/FPO News, Company Analysis,
Company Profile:
Dhaulagiri Laghubitta Bittiya Sanstha Ltd. (DLBS) is a microfinance institution licensed as a national level “D “class financial institution from Nepal Rastra Bank, the central bank of Nepal. Established on 3rd July 2018 as a Public Limited Company under Company Act 2063 of Nepal and licensed from the Central Bank of Nepal on 19th Feb 2019, its head office is at Balgung Municipality 2 Shreenagar Tole Baglung. It aims to provide banking services to the rural unbanked population and contribute to the overall poverty reduction program through the increment of production and productivity in rural Nepal.
About the issue:
Dhaulagiri Laghubitta Bittiya Sanstha Limited (DLBS) will be issuing its IPO to the general public from today i.e. Shrawan 24 and close on 29th Shrawan, 2079. If unsubscribed, the issue can be extended up to Bhadra 07, 2079.
3,31,000 unit shares worth Rs. 3.31 crores will be issued at a par value of Rs. 100 per share. This is 32.105% of the company's issued capital. Out of the offered 3,31,000 units; 0.5% of the total offered shares to the general public i.e. 5,155 units have been set aside for the employees of the company and 5% of the total offered shares to the general public i.e. 16,550 units have been set aside for the mutual funds. The remaining 3,09,295 units are for the general public.
Applications can be placed for a minimum of 10 units and a maximum of 1000 units. Sunrise Capital Limited has been appointed as the issue manager for the IPO issuance.
| Dhaulagiri Laghubitta Bittiya Sanstha Limited | |||
|---|---|---|---|
| Particulars | Percentage | Units | Amount |
| Total Capital | 100% | 1,031,000.00 | 103,100,000.00 |
| Total Issue (General Public) | 32.105% | 331,000 | 33,100,000.00 |
| Issue Manager | Sunrise Capital Limited | ||
| Issue Open Date | Shrawan 24 | ||
| Issue Closing Date (earliest) | Shrawan 29 | ||
| Issue Closing Date (Late) | Bhadra 07 | ||
| Minimum Application | 10 | ||
| Maximum Application | 1,000 | ||
Capital Structure:
| Authorized Capital | 15,00,00,000 |
| Issued Capital | 10,31,00,000 |
| Current Paid-Up Capital | 7,00,00,000 |
| Capital after IPO Issuance | 10,31,00,000 |
Shareholding Structure:
| Number of Shares | Amount | Percentage | Remarks | |
|---|---|---|---|---|
| Promoters Shareholders | 700,000.00 | 70,000,000.00 | 67.895% | Already issued |
| General Public | 331,000.00 | 33,100,000.00 | 32.105% | To be issued |
Board of Directors:
| Name | Position |
|---|---|
| Mr. Ishwor Lal Rajbhandari | Chairman |
| Mr. Hari Prasad Sharma | Board of Director |
| Dr. Sudarsan Silwal | Board of Director |
| Ms. Srijana Thapa | Board of Director |
| Mr. Uttam Kumar Rajbhandari | Board of Director |
Financial Statement:
| Financial Highlights | |||||||
|---|---|---|---|---|---|---|---|
| Particulars | Actual | Estimated | |||||
| 2075/76 | 2076/77 | 2077/78 | 2078 (Q3) | 2078/79 | 2079/80 | 2080/81 | |
| Total Paid-Up Capital ('000) | 70,000.00 | 70,000.00 | 70,000.00 | 70,000.00 | 103,100.00 | 103,100.00 | 103,100.00 |
| Reserve & Surplus ('000) | 50,890.00 | 52,158.00 | 84,228.00 | 108,359.00 | 128,778.00 | 180,310.00 | 252,504.00 |
| Debt ('000) | - | - | - | - | - | - | - |
| Revenue ('000) | - | - | - | - | - | - | - |
| Interest Expenses ('000) | 20,886.00 | 45,408.00 | 43,770.00 | 65,275.00 | 94,123.00 | 138,279.00 | 196,046.00 |
| Net Profit ('0000) | 4,097.00 | 190.00 | 31,808.00 | 24,786.00 | 45,772.00 | 51,533.00 | 72,194.00 |
| Earnings per share (Rs.) | 5.85 | 0.27 | 45.44 | 35.40 | 44.40 | 49.98 | 70.02 |
| Net worth per share (Rs.) | 105.65 | 105.90 | 148.66 | 254.79 | 175.88 | 224.87 | 293.49 |
| Debt-Equity (times) | - | - | - | - | - | - | - |
| Return on Equity (%) | 0.34 | 0.02 | 2.06 | 1.39 | 1.97 | 1.82 | 2.03 |
CARE Ratings:
CARE Ratings Nepal Limited (CRNL) has assigned a rating of ‘CARE-NP BB- (Is)’ [Double B Minus (Issuer)] to Dhaulagiri Laghubitta Bittiya Sanstha Limited (DLBS). Issuers with this rating are considered to have a moderate risk of default regarding timely servicing of financial obligations.
Key Weaknesses
- The small scale of operations with moderate assets quality.
- Significantly low market share in the industry, albeit moderate growth in business over the period.
- Below average financial performance.
- High Concentration of advances in the agriculture sector.
- Presence in the highly competitive industry.
- The inherent risk involved in the microfinance industry.
- Exposure to regulatory risks related to the microfinance industry.
Key Rating Strengths
- Experienced board members, management team, and support from the institutional investor.
- Adequate level of capitalization however minimum regulatory capital requirement not met and moderate liquidity.
- Diversified Resource Profile.
- Geographical diversification of business.
How much to apply?
When we observe the current scenario, investors have still shown a high level of confidence in IPO despite declining NEPSE, which is shown by the huge demand in the recently concluded IPO.
When we look at the current trend of IPO in the market, we see that more than 15-16 lakhs of investors have been applying in the recent issue. This shows that, even if a quarter of this number applied for the issue of Dhaulagiri Laghubitta Bittiya Sanstha Limited, the issue will be oversubscribed. Since the "10 kitta rule" still holds true for IPO; 30,929 applicants will be lucky enough to get the 10 unit shares of Dhaulagiri Laghubitta Bittiya Sanstha Limited. So, it is advisable to apply only 10 units.
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