Manba Finance lists at 25% premium over IPO price. Hold or sell?

Will Manba Finance shares continue to rise after listing on Dalal Street or is it time to cash in on your gains? Here's all you need to know.

In Short

• Manba Finance lists at 25% premium on BSE debut
• Investors advised to hold with Rs 130 stop loss
• Competitive market could challenge Manba Finance's future growth

Shares of Manba Finance made a commendable debut on the Bombay Stock Exchange (BSE), listing at Rs 150, which marks a 25% premium over its initial public offering (IPO) price of Rs 120 per share.

On the National Stock Exchange (NSE), the stock opened at Fs 145, reflecting a 20.83% premium.

While this positive start is noteworthy, it did not meet earlier expectations; pre-listing projections suggested a grey market premium (GMP) of Rs 38-40, indicating potential gains of up to 35%.

Should you hold or sell?

Shivani Nyati, Head of Wealth at Swastika Investmart Ltd., commented on the stock's performance: “While the listing gain is commendable, investors should remain cautious as the IPO was fully priced and the company operates in a competitive market with inherent risks. However, Manba Finance's focus on niche segments positions it for potential growth.”

She further advised existing investors to hold their shares with a stop loss set around Rs 130 while closely monitoring the company's performance and market conditions.

Despite the strong debut, analysts suggest that investors should carefully consider their options moving forward. The competitive landscape in which Manba Finance operates could pose challenges, particularly as more players enter the market.

Additionally, while the initial listing is promising, investors need to keep an eye on broader market trends and economic indicators that may impact the company's performance.

Manba Finance IPO details

The IPO, which ran from September 23 to September 25, was priced within a band of Rs 114-120 per share and involved a total fresh share sale of 1.26 crore shares, raising approximately Rs 150.84 crore.

The offering saw overwhelming interest, being subscribed 224.10 times overall, with non-institutional investors particularly enthusiastic, subscribing 511.65 times. Qualified institutional buyers (QIBs) and retail investors also displayed strong demand, with subscription rates of 148.55 times and 144.03 times, respectively.

Founded in 1998, Manba Finance operates as a non-banking finance company (NBFC), specializing in financial solutions for vehicles including two-wheelers, three-wheelers, electric vehicles, used cars, and personal loans. This niche focus positions the company for potential growth in a competitive market.

The IPO was managed by Hem Securities as the lead book runner, with Link Intime India serving as the registrar for the offering.

The massive subscription rates reflect investor confidence in Manba Finance's business model and growth prospects. The company’s focus on financing two- and three-wheelers aligns well with current trends toward affordable transportation solutions, especially in emerging markets where such vehicles are increasingly popular.

As urbanisation continues to rise and more consumers seek convenient financing options for personal mobility solutions, Manba Finance may find itself well-positioned to capitalise on these trends.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)