NADEP Laghubitta IPO, a Lucrative offer ???

Company Overview

Having the registered office at Gajuri-1 in Dhading district, and with an ambition to provide excellent microfinance service, NADEP Laghubitta was established in 2070/10/15. Starting the operation as a D-class bank on 2072/04/07, NADEP Laghubitta is currently operating from 69 branches.

 

Issue Details

Company Name	NADEP Laghubitta Bittiya Sanstha Limited.
Total Issue Units	4,80,000
Units for General Public	4,32,000
Minimum Units to be Applied	20
Maximum Units to be Applied	2,400
Issue Open	2075/03/10
Issue Close (On Early)	2075/03/13
Issue Close (Late)	2075/04/07
Units for Mutual Funds (5%)	24,000
Units For Employees (5%)	24,000
Issue Manager	Nabil Investment Banking Limited

 

Capital Structure

Particulars	Amount
Authorized Capital	Rs 32 crores
Issued Capital	Rs 16 crores
Paid-Up Capital	Rs 16 crores (after IPO)

 

 

Key Shareholders

Shareholder	Units
Nabil Bank Limited	400,000
Bikas Ayojana Sewa Kendra	400,000
Lumbini Bikas Bank	160,000

 

Paid-up Capital

The Company started its operation with a capital of Rs 11.20 crores back then in 2071/72. The company had a reserve of Rs 65.35 lakh at that time. However, during this three years of operation the company neither issued any bonus shares or any right shares. Thus, the paid-up capital of the company looks stagnant. Moreover, the reserve of the company by fy 2073/74 was almost equal to the paid-up capital.

However, seeing the projections, NADEP has planned to have a paid-up capital of Rs 24 crore by the end of this fy. Though, IPO will raise the capital to Rs 16 crores, the company has further planned to increase the capital by 50% within this year. The company has again projected to double the capital in the next year. Thus, investors can possibly expect bonus, right issue or both in the next year. NADEP has projected to have a paid-up capital of Rs 60 crores by 2076/77.

 

Operating Profit and Net Interest Income

Net-Interest Income is considered to be a primary source of income for any BFI or MFIs and contributes a major portion of Operating Income. Increasing trend of both operating profit and net interest income is considered as a good sign for a company. NADEP Laghubitta had an operating profit of Rs 11.09 crores and a net interest income of Rs 23.58 crores last year.

The company projects to raise its Operating profit to Rs 44.78 crores by the year 2076/77.

 

Net Profit

Net profit is the income after deducting every kind of operating and non-operating expenses. Higher the Net profit, the better it is. The success of a company is generally measured in terms of net profit. Some portion of this income moves to the reserve whereas some is distributed amongst the shareholders in the form dividend. Thus, this is one among the major parameters that concerns an investor. An investor can expect a dividend based on how much the company has earned.

NADEP Laghubitta has a net profit of Rs 75 lakh in the first year of its formal operation. However, the Company successfully increased its earning and reduced its expenses, as a result NADEP earned a net profit of Rs 7.02 crores in the year 2073/74. The company further projects to increase its net profit to Rs 28.49 crores by the end of year 2076/77.

 

Key Indicators (as of 2073/74)

Earning Per Share (EPS)	62.76
Net-worth Per Share	199.16
Return on Net-worth	31.51%

 

Takeaway

Analyzing the company’s fundamental performance, it is seen that the company has above average fundamentals. The profit along with other indicators are increasing at an exciting rate. The company has further planned to increase the capital as well as improve the performance.

Moreover, Microfinance companies due to the limited supply of shares, have high price of in the secondary market and minimum units to apply just being 20, we can conclude this issue as lucrative. The minimum units just being 20, one can invest in the company with just Rs 2000 in hand. We can expect a huge number of applicants in this issue. The result will most likely be decided using lottery. Interested applicants are suggested to apply just for 20 units.