Unnati Microfinance IPO, a lucrative offer ?

Company Overview
Bhairahawa based 10 district Unnati Microfinance Bittiya Sanstha Limited was registered as a public limited company on 2070/09/17. The company formally started its operation from 2071/07/21. The company has a highly experienced promoters and directors. The company has a workplace in districts like Rupandehi, Palpa, Pyuthan, Kapilbastu, Arghakhanchi, Gulmi,  Parbat, Baglung, Myagdi and Mustang. 

Capital Structure

Paid-up Capital

The Company started its operation with a capital of Rs 1.54 crores back then in 2071/72. The company had a negative reserve of Rs 43 lakh at that time . However, during this three years of operation the company successfully raised its reserve to Rs 1.93 crores. The company is expecting to increase its reserve to Rs 7.19 crores by the end of FY 2076/77. 

Operational Income and Net Interest Income  

Net-Interest Income is considered to be a primary source of income for any BFI and contributes a major portion of Operating Income. Increasing trend of both operating income and net interest income is considered as a good sign for a company. Unnati Microfinance had an operating income of Rs 18 lakh and a net interest income of Rs 11 lakh on the first year of its inception. The company successfully raised its operating income and Net interest income to Rs 6.11 crores and Rs 5.15 crores resp. 
The company projects to raise its Operating income to Rs 9.23 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. 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.

Unnati microfinance was at a net-loss of Rs 0.44 crores in the first year of its formal operation. However, The Company successfully increased its earning and reduced its expenses, As a result unnati earned a net profit of Rs 1.69 crores in the year 2073/74. The company further projects to increase its net profit to Rs 2.05 crores by the end of year 2076/77. 
One can apply for this public issue filling the ASBA form from any ASBA member.

Analyzing the company’s fundamental performance in the past, the company looks decent. However, due to the high price of microfinance companies in the secondary market and minimum units to apply just being 10, we can conclude this issue as lucrative. The minimum units just being 10, one can invest in the company with just Rs 1000 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 10 units.