Laxmi India Finance IPO: Issue booked sails through on day 3, GMP takes a hit

The initial public offering (IPO) of Laxmi India Finance saw a muted bidding interest from the investors during the third and final day of the bidding process from all the categories of the investors. The issue was booked more than 35 per cent on day one and ended day two with nearly 90 per cent subscription.

Laxmi India Finance is selling its shares in the price band of Rs 150-158 apiece. Investors can apply for a minimum of 94 shares and its multiples thereafter. It is looking to raise Rs 254.26 crore via IPO, which includes a fresh share sale of Rs 165.17 crore and an offer-for-sale (OFS) of up to 56,38,620 equity shares and Rs 89.09 crore.

According to the data from BSE, the investors made bids for 1,84,16,010 equity shares, or 1.63 times, compared to the 1,13,12,816 equity shares offered for the subscription by 2.50 pm on Thursday, July 31, 2025. The bidding for the issue, which kicked-off on Tuesday, July 29, shall conclude today.

The allocation for qualified institutional bidders (QIBs) was subscribed 1.11 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 1.49 times. Allocations for retail investors and eligible employees were subscribed 1.99 times and 1.43 times, respectively.

Incorporated in 1996, Laxmi India Finance is engaged in the business of offering MSME loans, vehicle loans, construction loans, and other lending products, supporting small businesses and entrepreneurs, with over 80 per cent of MSME loans qualifying as priority sector lending.

The grey market premium (GMP) of Laxmi India Finance has seen a sharp correction on the third day amid muted bidding and weak market sentiments. Last heard, the company was commanding a premium of Rs 0-2 per share in the unofficial market, suggesting a 1-2 per cent listing gains for the investors. The GMP stood around Rs 15 before the issue had opened for bidding.

Analysts mostly have a positive view on this issue. They suggest subscribing to it citing its strong market presence, vast market opportunities, solid credit assessment and capital allocation, and experienced management. However, risks of the MSME sector, cost of capital, and regional concentration are its major risks.

The valuation is in line with peers who are lending in the MFI space, and given the RBI tightening norms and the rate cuts happening, the sector is better placed to weather the storms seen in the last few quarters, said Adroit Financial Services. "It is recommended to “Subscribe” to the IPO for long-term investment, considering its valuation and growth potential," it said.

Laxmi India Finance intends to acquire new customers and selectively expand operations to locations where the company expects customers to be underserved, have lower penetration, and where there could be an opportunity for them to service an increased customer base, said Master Capital Services with a 'subscribe for long-term' rating for this IPO.

For the year ended on March 31, 2025, Laxmi India Finance reported a net profit of Rs 36.01 crore with a revenue of Rs 248.04 crore. The company clocked a net profit of Rs 22.47 crore with a revenue of Rs 175.02 crore for the financial year ended on March 31, 2025. The company shall command a net profit of close to Rs 825.83 crore.

"We assign a 'subscribe' rating to this IPO as the company has a strong focus on MSME financing and operates with a Hub and Branch model that enhances operational efficiency, reduces costs, and improves customer outreach," said Marwadi Financial Services. "Also, it is available at reasonable valuation as compared to its peers."

The company has reserved 50 per cent of the net offer for the qualified institutional bidders, while non-institutional investors will have 15 per cent of the offer allocated for them. Retail investors will have 35 per cent of the reservation in the IPO. Laxmi India Finance raised Rs 75.5 crore from anchor investors as it allocated 47.79 lakh shares at Rs 158 apiece.

PL Capital Markets is the book-running lead manager of the Laxmi India Finance IPO, while MUFG Intime India (Link Intime) is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE on Tuesday, August 5.