SBFC Finance vs Concord Biotech IPO: Which Issue Should You Bet?

SBFC Finance Limited and Concord Biotech Limited are two mainboard IPOs that will hit D-Street soon. The subscription period for Concord Biotech's IPO will commence on August 4 of 2023, whereas the subscription period for SBFC Finance Limited's IPO will begin today, August 3.

SBFC Finance IPO

The NBFC aims to raise Rs 1,025 crore through a public offering, including a fresh issuance of shares valued at Rs 600 crore and a promoter offer for sale (OFS) of Rs 425 crore. The offer's subscription period will begin on August 3 and end on August 7, respectively. The offer's price range has been defined at Rs. 54-57 per share. Shares worth Rs 306.25 crore, Rs 75.16 crore, and Rs 43.59 crore will be sold through OFS by Arpwood Partners Investment Advisors LLP, Arpwood Capital, and Eight45 Services LLP.

In the IPO, investors can purchase a minimum of 260 equity shares. The minimum investment for individual investors is, therefore, Rs 14,820 per lot (260 shares), while the maximum investment is Rs 1,92,660 for 13 lots (3,380 equity shares). The company has set aside 50% of the offering for qualified institutional buyers, 15% for high-net-worth individuals, and the remaining 35% for regular investors. The NBFC will figure out the IPO share allocation standards on August 10. SBFC is scheduled to begin trading on the BSE and NSE platforms on August 16. The issue's merchant bankers are ICICI Securities, Axis Capital, and Kotak Mahindra Capital Company, while KFin Technologies is the offer's registrar.

Prior to the company's initial public offering, anchor investors Rs 304.43 crore to the company. The company disclosed to the exchanges that on August 2, 2023, it issued 5,34,07,893 shares to anchor investors for a price of Rs. 57 per share. The names of Abu Dhabi Investment Authority, Carmignac Portfolio, Axis Mutual Fund, Birla Mutual Fund, Loomis Sayles, and Neuberger Berman are among those on the Anchor Investor list of domestic and international investors. Existing investors ICICI MF, SBI MF, HDFC MF, Amansa, Malabar, and Steadview Capital participated in the offer along with the anchor group.

2,23,08,260 equity shares, or 42% of the total anchor book size, were granted to 10 domestic mutual funds through a total of 18 schemes out of the overall allocation of 5,34,07,893 equity shares to the anchor investors, according to SBFC Finance.

Concord Biotech IPO

Effective August 4, the firm will start accepting subscriptions; the closure will occur on August 8. On August 3, the anchor book will be available for one day. A pharmaceutical company with its headquarters in Ahmedabad aims to raise Rs 1,550.59 crore through the public offering of more than 2,09 crore equity shares considering the upper price band of the issue. The offer's price range has been set at Rs. 705-741 per share. On August 11, the allocation is scheduled to be finalised, and on August 14, refunds will begin. On August 17, the shares will be credited to the Demat accounts belonging to eligible investors.

Helix Investment Holdings Pte Ltd.'s 2,09,25,652 equity shares are being offered for sale solely in Concord Biotech Initial Public Offering (IPO) via offer-for-sale (OFS). Investors have to shell out a minimum of Rs 14,820 per lot, or 20 shares, in the Concord Biotech initial public offering. The registrar for the Concord Biotech IPO is Link Intime India Pvt Ltd, and the book-running lead managers for the issue are Kotak Mahindra Capital, Citigroup Global, and Jefferies India.

In the public offering, Concord Biotech has set aside 35% of the shares for retail investors, 15% for non-institutional investors, and 50% for qualified institutional buyers (QIB). The corporation allocates up to 10,000 equity shares for its employees, who can purchase them at a discounted rate of Rs 70 per share. On August 18, Concord Biotech shares are anticipated to list on the BSE and NSE.

Which IPO Should You Subscribe?

"We assigned Subscribe with Caution rating to SBFC Finance mainly due to expensive valuation. At the higher price band of Rs. 57, the issue is priced at P/BV of 2.5x on post-issues trailing BV basis which seems on higher side for MSME financier. Though the company is high growth phase, RoE has been remained in single digit over the past three fiscals," said Rajnath Yadav, Research Analyst-Choice Broking said.

"Concord Biotech Ltd., a bio-pharma company is also coming with an IPO. Growth in the global market of fermentation-based APIs is expected to be driven by immunology, oncology and anti-infective therapeutic areas. CBL is focusing on these therapeutic areas with its wide range of niche & complex APIs. Moreover, considering its manufacturing capabilities and geographic presence CBL is well placed to benefit from the expansion in the market. At the higher price band, CBL is demanding a P/E multiple of 32.3x (to its FY23 earning), which is at discount to the peer average. Thus, we have assigned a SUBSCRIBE rating for the issue," said Rajnath Yadav.

Nirav Karkera, Head of Research, Fisdom, said "The IPOs are not quite comparable as both operate in different segments. However, from an investment standpoint, one may attempt to weigh growth prospects offered by both to arrive at a decision. SBFC, operating in the robust NBFC sector, seems to be well-positioned to capitalize on the current macro tailwinds. Its focus on serving the underbanked MSME businesses presents an opportunity to build a strong and reliable loan book with lower average ticket sizes. Moreover, SBFC has demonstrated credibility in its lending practices, reflected in its relatively lower gross and net NPA levels."

"On the other hand, Concord Biotech operates in a promising sunrise segment with vast growth potential. Concentrating on select high-margin areas and having a favorable position in the value chain, the company seems poised for success. However, investors might be concerned that the IPO proceeds aren't allocated towards fueling Concord Biotech's growth aspirations. Considering both companies' potential, it's fair to expect SBFC to deliver stronger performance in the shorter term. On the other hand, investors should keep an eye on Concord Biotech post-listing for developments that boost confidence," said Nirav Karkera.

"Even though both IPOs look attractive, in terms of PE ratio and ROE, Concord Biotech has much better numbers and can give steadier returns to investors and should be subscribed as a long term bet for investors," AR Ramachandran from Tips2trades said.

"This week we have two more IPOs in the pipeline, SBFC Finance & Concord Biotech Limited. Both belong to different business categories and have good financials. However, their price band has a huge difference. Before applying you should understand about the companies and business and then go for IPO applications. Let's have a better understanding of these proposed IPOs.

SBFC Finance IPO is set to open on August 3, tomorrow. This Company is engaged in non-deposit-taking, non-banking financial services. Its major revenues come from MSME loans and loans against gold. The IPO price band range is Rs 54-57 per share there is a probability of premium listing so can apply for it. It's a "Subscribe" from our side, said V.L.A. Ambala (SEBI Registered Research Analyst), Stock Market Today (SMT).

Concord Biotech Limited going to list on 4th Aug 2023, it is a biotechnology company (demanding and emerging business category) and one of the leading global manufacturers of select fermentation-based APIs. Its Revenue has risen by almost 20% YoY overall finances are good. IPO is proposed to list at Rs 705 to Rs 741 per Equity Share price band, which is a little higher but still, one can apply for this IPO and observe QIB subscription data on the second day if it is fully subscribed then continue with your applications said V.L.A. Ambala (SEBI Registered Research Analyst), Stock Market Today (SMT).

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.