Established in 1991, Arohan Financial Securities is one of the leading NBFC-MFIs in India. The company started its microfinance business in 2006. It operates in low-income, unpenetrated states of the country. The offerings of Arohan Financial Services include credit as well as insurance products. The former includes income-generating loans and other forms of financial assistance, while the latter covers life and health insurance products.
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As on 30 September 2020, the Kolkata-based company which commenced its operations in 2006, has served approximately 2.21 million borrowers across 17 states and stands as the largest NBFC-MFI in eastern India as per gross loan portfolio. It offers a broad range of products across credit and financial instruments. The microfinance business of the company operates out of 710 branches across 11 states and the MSME lending business has a reach across eight states through its 10 branches.
Between FY17-FY20, Arohan Financial Services, as per a CRISIL report, had the second highest gross loan portfolio growth at 68 per cent CAGR and stood amongst top five NBFC-MFIs in India. Arohan Financial also had the highest customer growth at 49 per cent CAGR between FY18-FY20. The company’s disbursements, AUM, total comprehensive income has been growing YOY and as on FY20 stood at a CAGR of 110.03 per cent.
Arohan Financial has filed preliminary papers with SEBI to raise Rs. 1750 crores to Rs. 1800 crores. As per its DRHP, the company’s IPO will include a fresh issue of Rs. 850 crores and an offer for sale (OFS) of 27,055,893 shares by existing shareholders.
Qualified institutional buyers (QIBs) can subscribe to up to 50% of the IPO, whereas retail individual investors will have up to 35% of the reserved portion. 15% of the issue size will be set aside for non-institutional investors. Furthermore, eligible employees of this company can subscribe up to 5% of Arohan Financial’s initial offer.
Edelweiss Financial Services Ltd, ICICI Securities Ltd, Nomura Financial Advisory and Securities (India) Private Limited and SBI Capital Markets Limited are the book running lead managers (BRLMs) to the issue.
Arohan Financial Services Unlisted Shares Details:
| Total Available Shares: | 1000+ |
| Face Value: | ₹ 10 Per Equity Share |
| ISIN: | INE808K01017 |
| Lot Size: | 100 Shares |
| Current Unlisted Share Price: | Best rate in market per equity share |
Arohan Valuation
At current price of around Rs 200 per share, shares of Arohan Financial Services are available at market capitalisation of about Rs 2,400 crore.
Besides an impressive scale of operations, this company has healthy profitability indicators and a highly experienced management team that has a proven track record.
Furthermore, Arohan has a well-diversified borrowing profile owing to a high share of funding received from banks. With the Indian financial services industry set to expand in the upcoming years, the outlook for this company appears to be quite positive.
As per a report published by CRISIL, Arohan Financial Services was the fifth-largest NBFC-MFI in India as of 30 September 2020. Some more noteworthy highlights of this company include the following:
– As of 30 September 2020, the company catered to approximately 2.21 million borrowers across 17 states in India.
– Between FY2018 and 2019, Arohan Financial recorded the highest CAGR (49%) in relation to customer growth among the top 5 NBFC-MFIs in India.
– Arohan Financial’s microfinance segment comprised a network of 710 branches across 11 states in the country as of 30 September 2020.
– Between FY2017 and 2018, Arohan Financial Services had the second-highest CAGR (68%) in terms of gross loan portfolio among the NBFC-MFIs in India.
– This company has raised funds worth approximately $20 million over 3 rounds. its last funding was on 18 May 2017.
In terms of AUM, this company is one of the largest NBFC-MFIs in India. As of 30 June 2020, Arohan’s AUM stood at approximately Rs. 4,862 crores. It has a proven track record of 13 years.
Arohan Financial has a strong capitalisation profile owing to adequate internal capital generation and equity infusions on a regular basis.
This company’s management team includes seasoned professionals who have years of experience in the domain of financial services.
In FY20, Arohan Financial has Revenue of Rs 934 Crores and profit after tax (PAT) of Rs 126 crore. Book value per share as on 30 September 2020 is Rs 93 and EPS is 12.07.
Arohan’s NIM stood at 10.49% of AMA in FY2020, whereas in the previous financial year, it was 11.14%. Operating expenses of this company diminished to just over 4.5% of AMA in FY2020 in comparison to 5.43% in FY2019.
As per projections, the financial services industry is set to expand rapidly till 2035 in India. Some of the major factors that would influence this growth include rising income and the government’s emphasis on financial inclusion. This represents a tremendous opportunity for Arohan Financial Services.