IPO Size: Rs. 254 cr 

• Fresh Issue of Rs. 165 cr for growth capital
• Offer For Sale (OFS) of Rs. 89 cr by the promoters (89% stake to reduce to 60%)

Price band: Rs. 150-158 per share  

M cap: Rs. 826 cr, implying 31% dilution

IPO Date: Tue 29^th Jul to Thu 31^st Jul 2025, Listing Tue 5^th Aug 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Jaipur-headquartered NBFC

Laxmi India Finance is a non-deposit taking non-banking finance company (NBFC) with assets under management (AUM) of Rs. 1,277 cr, comprising MSME loans, against residential property (76% of AUM) and vehicle loans, mainly commercial vehicles (16%). Presence is concentrated in semi-urban areas of Rajasthan (80% of AUM), Madhya Pradesh (13%) and Gujarat (7%).

Undisclosed Acquisition Details

Company has recently acquired another NBFC, having Rs. 53 cr AUM, 1,750 customers and 2 branches for Rs. 52 cr. Surprisingly, it has not disclosed even basic details like target company name, besides not mentioning date of acquisition, asset quality, net worth etc.

On one hand, it needs funds for own growth while on the other, purchases smaller peers at premium valuation of 100% of AUM, while itself making IPO at 50% of pre-money valuation.

Average Financials

In FY25, AUM grew at 33% YoY on a small base, with Net interest income of Rs. 116 cr. As yields are as high as 22%, due to customer being underserved, the net interest margin (NIM) is healthy at 10%.

Provisions jumped to Rs. 12 cr in FY25, from Rs. 2 cr in FY24 and FY23, spurting credit cost to 1%. On PAT of Rs. 36 cr, EPS stood at Rs. 8.6 for FY25, with net NPA of 0.48%, as of 31.3.25, rising from 0.33%, as of 31.3.24.

Total debt stands at Rs. 1,137 cr, mostly term loans, implying 4.4x leverage on a net worth of Rs. 258 cr, with a credit rating of A-.

Expensive Pricing

On post-money book value per share of Rs.81, IPO of Laxmi India Finance is proposed at a price-to-book value (PBV) multiple of 2x. Even assuming 30% profit growth for FY26E, expected book value of Rs.90 per share, the PBV multiple is at 1.8x, and PE is at 15.8x, both of which are seen stretched, for a nano cap stock.

Company’s closed peer, in terms of loan book, is CSL Finance, with Rs. 1,195 cr AUM. CSL’s financial matrix is superior to Laxmi, with 12% NIM and 0.34% net NPA, yet it is trading at FY26E PBV of 1.2x and PE of 10x. Thus, pricing of Laxmi India IPO is swayed, maybe, by bull-market conditions.

Besides, Q1FY26 results declared so far, indicate increasing asset quality stress and higher impairments, keeping outlook cautious.