Laxmi India Finance IPO

More About Laxmi India Finance Limited

Laxmi India Finance Limited is a non-deposit taking Non-Banking Financial Company (NBFC) dedicated to addressing the financial needs of underserved customers in India’s lending market. As of September 30, 2024, the company operates through 139 branches across Rajasthan, Gujarat, Madhya Pradesh, and Chhattisgarh. It has established the widest network in Rajasthan among its peers for FY24 (Source: CARE Report).

Business Model and Offerings

Diverse Product Portfolio

The company provides a range of lending products tailored to various customer needs, including:

• MSME Loans: Supporting small businesses and entrepreneurs, with 80% qualifying as Priority Sector Lending under RBI guidelines.

• Vehicle Loans: Financing used commercial vehicles, personal vehicles, tractors, two-wheelers, and electric vehicles.

• Construction Loans: Enabling property purchase, renovation, and construction.

• Other Loans: Small-ticket unsecured loans for business and personal needs.

Key Performance Metrics

• Assets Under Management (AUM): ₹10,355.35 million as of June 30, 2024, reflecting a CAGR of 34.49% since March 31, 2022.

• MSME Loans: 75.49% of AUM, growing at a CAGR of 30.73%.

• Vehicle Loans: 17.46% of AUM, with a CAGR of 78.55%.

• Customer Base: 26,065 customers, including 15,732 active MSME clients and 6,146 vehicle loan clients.

Technological Advancements

Digital Integration

Laxmi India Finance leverages advanced technology across all operations:

• Loan origination and disbursal through Loan Origination Software (LOS) and Loan Management System (LMS).

• A mobile app for seamless customer onboarding.

• CRM tools for enhanced customer engagement and retention.

Efficiency Improvements

• Real-time tracking of collections with a dedicated team of 255 personnel.

• Reduced borrowing costs from 12.46% in FY22 to 11.49% by June 30, 2024, attributed to credit rating upgrades and expanded partnerships.

Market Position and Growth

Branch Network Expansion

• Branches increased from 93 in FY22 to 135 by June 30, 2024.

• Focused on deepening market penetration and exploring new geographies.

Improving Metrics

• Collection efficiency stood at 96.06% for the quarter ending June 30, 2024.

• Credit rating improved to ‘A- with a stable outlook’ (Acuite Ratings).

Leadership and Vision

Laxmi India Finance is led by Deepak Baid, a financial services veteran with over 20 years of experience. Supported by a dedicated management team, the company continues to bridge the financial inclusion gap and cater to underserved markets with a focus on technology-driven efficiency and customer-centric solutions.

Industry Outlook

Overview of NBFC Growth Trends (2019–2027)

India’s Non-Banking Financial Companies (NBFCs) have witnessed transformative growth between FY19 and FY24, with promising projections through FY27. Regulatory harmonisation in 2019 merged categories such as AFCs, LCs, and ICs into NBFC-ICC, forming 11 activity-based classifications.

Key Growth Highlights:

• Systemic credit expanded from ₹134.53 trillion (FY19) to ₹217.47 trillion (FY24E).

• Projected to hit ₹300 trillion by FY27, growing at ~11.8% CAGR.

• NBFCs’ credit share rose from 17% (FY19) to an expected 20% by FY26.

• Retail credit share increased from 21.6% (FY19) to 30.7% (FY24E).

• NBFC housing credit rose 53% YoY in FY24.

MSME Credit Trends (2019–2023):

• MSME credit grew 11% CAGR (Sep 2019–Sep 2023); 13% CAGR post-COVID.

• NBFCs achieved 31.2% CAGR in MSME lending (FY21–FY23).

• Borrowers rose from 5.2M to 8M, with credit outstanding at ₹28.2 trillion.

Auto Financing Outlook:

• Retail auto loans rose 22.2% YoY (Sep 2023); commercial vehicle financing up 30%.

• NBFCs play a key role in rural lending, especially in used vehicle financing.

How Will Laxmi India Finance Limited Benefit?

• Expanding branch network strengthens reach across semi-urban and rural underserved markets.

• MSME lending focus aligns with rising demand and 11% sector growth.

• Vehicle loan segment surges with 78.55% CAGR, driving financing opportunities.

• Technology adoption streamlines processes, reduces costs, and boosts operational efficiency.

• Improved asset quality and credit rating enables access to cheaper capital.

• Geographic expansion from 93 to 135 branches unlocks new growth areas.

• Retail and MSME product focus taps into strong multi-sector lending demand.

• Government infrastructure push increases demand for construction and property finance products.

Peer Group Comparison

Name of the Company	Face Value (₹)	EPS (Basic)  (₹)	NAV (₹)	P/E	RoNW (%)
Laxmi India Finance	5	6.11	101.30	[●]	12.80
MAS Financial Services	10	15.11	107.87	18.35	16.09
Five Star Business Finance	12	28.64	177.68	22.40	17.50
SBFC Finance	10	2.35	25.87	37.87	10.43
Ugro Capital	10	13.39	154.95	18.41	9.40
CSL Finance	10	28.60	208.42	11.68	15.15
AKME Fintrade (India) Limited	10	5.85	52.31	16.04	8.66
Moneyboxx Finance Ltd	10	3.45	55.38	68.34	7.31

Laxmi India Finance Limited IPO Strengths

• Commitment to MSME Financing

Laxmi India Finance Limited focuses primarily on financing MSMEs, contributing over 75% of revenues in recent fiscals. The company addresses the credit needs of small businesses with loans ranging from ₹0.05 to ₹2.5 million, secured by tangible assets. With a growing customer base and strong loan-to-value (LTV) ratios, Laxmi India leverages the significant unmet demand in this sector to promote financial inclusion and economic growth.

• Diversified Funding Sources

The company secures cost-effective capital from varied sources, including banks, NBFCs, and market instruments like NCDs. It has established strong lender relationships, achieving competitive borrowing costs and repeat funding. Laxmi India’s capital adequacy ratio and asset-liability management (ALM) practices ensure liquidity and operational stability. This strategic approach enhances financial flexibility and sustains growth while maintaining resilience during economic challenges.

• Robust Risk Management Framework

Laxmi India employs a comprehensive credit assessment and risk management system tailored to underserved segments. With stringent quality checks and collateral-backed lending, the company balances customer profiles and ensures operational efficiency. Its policies address credit, market, and liquidity risks. A significant proportion of customers have high credit scores, demonstrating its focus on maintaining asset quality while serving emerging borrowers across diverse markets.

• Extensive Geographic Presence

The company caters to a wide demographic, including rural, semi-urban, and urban customers. With a strong presence across multiple locations, Laxmi India tailors its financial products to diverse needs. This extensive reach, coupled with its focus on financial inclusion, allows the company to effectively support underserved populations, fostering regional development and community growth through accessible financial services.

• Technology-Driven Operations

Laxmi India integrates advanced technology in its operations, including data-driven credit assessment and digital loan processing. These innovations streamline workflows, reduce turnaround times, and enhance customer experience. By leveraging technology for risk evaluation and loan management, the company not only ensures efficiency but also strengthens its ability to serve customers in an increasingly digital economy.

• Strong Promoter Commitment

The promoters of Laxmi India Finance Limited demonstrate unwavering support through regular capital infusions, holding over 87% equity. Their commitment underpins the company’s stability and growth trajectory. This strong backing, coupled with improved credit ratings and prudent financial management, enables the company to negotiate favourable terms with lenders and expand its business sustainably.

Key Strategies for Laxmi India Finance Limited

• Expansion of Geographical Footprint

Laxmi India Finance Limited continues expanding its geographical footprint, aiming to reach underserved markets with lower penetration. The company opened 4 new branches in Q3 2024 and focuses on long-term customer relationships, selective location expansion, and strategic acquisitions. It also plans to increase district-level penetration and enhance market presence, guided by comprehensive market studies, to foster business growth in new and existing regions.

• Leveraging Branch and Customer Network

The company capitalizes on cross-selling opportunities within its existing customer base to increase revenues and customer retention. By targeting current customers, Laxmi India Finance aims to diversify product offerings and expand its loan portfolio. It uses data analytics and relationship-based selling to improve operational efficiency, manage risks, and drive higher profitability through increased loan sizes and customer acquisition.

• Enhancing Information Technology

Laxmi India Finance is committed to boosting operational efficiency and customer service by investing in advanced technology. The company integrates digital tools for underwriting, loan origination, and collection processes, aiming to reduce operational risks, enhance customer experience, and drive business growth. The focus on mobile and digital transactions will further improve cost efficiency, lower acquisition costs, and provide better data-driven insights to refine strategies.

• Diversifying Borrowing Profile

Laxmi India Finance aims to optimize its borrowing costs through a diversified funding strategy, reducing dependence on expensive loans. By leveraging its improved credit rating, the company secures favorable terms with lenders, decreasing borrowing costs. The company utilizes a mix of term loans, working capital, securitized loans, and NCDs to ensure cost-effective financing, maintaining financial stability and supporting sustainable business growth