IPO Centre     17-Jun-24
New Issue Monitor
Akme Fintrade
Small NBFC operating in western India
Small size and business concentration in single state is hurdle for sustainable growth, business yet to cross pre-covid levels
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Akme Fintrade is a non-banking finance company (NBFC) incorporated in 1996, offering vehicle and business loans in rural and semi-urban geographies. The company carries out its operations in the format of hub & spoke business model. It has presence in 4 states - Rajasthan, Maharashtra, Madhya Pradesh and Gujarat through 12 branches and over 25 points of presence (physical and digital) having served over 2 lakh customer. Its registered office is located at Udaipur, Rajasthan and Corporate Office is at Mumbai, Maharashtra.

The key borrowers of the company are individuals and small business owners offering vehicle loans and business finance. The vehicle financing comprises of used commercial vehicle, 2 wheeler loans, used 2 wheeler loans.

The digital lending platform of the company www.aasaanloans.com is currently under development and will be rolled out in a phased manner. This digital lending platform is specifically focusing on Two-wheeler finance in the initial phase. Concurrently, IT team is actively engaged in developing the product for loan against property, commercial vehicle financing, and secured business loans, which will be introduced in a phased manner.

Vehicle Finance business with an AUM of Rs 78.8 crore end December 2023 primarily involves providing financing for purchases of two-wheelers and three-wheelers, passenger vehicles and used or new commercial vehicles. The customers are predominantly transport operators, small businesses and self-employed and salaried individuals with limited credit history. The loans are secured through the hypothecation of each asset financed.

Under business Finance, the company extends secured loans for business purposes to small and medium size enterprises, including businessmen, traders, manufacturers and self-employed professionals. The AUM of the company stands at Rs 379.46 crore end December 2023, of which SME/ business loan is Rs 300.67 crore or 79.23% of total credit exposure.

The company has entered into Co-lending agreements with other financial institutions providing wider access to the credit market in priority sector.

The customer base of the company stood at 32771 end December 2023. The company has employed 125 permanent employees end December 2023.

The company has maintained a diversified funding profile through established relationships with lenders and investors. The borrowings (other than debt securities and sub debts) were Rs 175.19 crore and subordinated liabilities were Rs 20 crore end December 2023. The total borrowings of the company were Rs 195.19 crore end December 2023.

Nirmal Kumar Jain, is the founder and Chairman and Managing Director of the company. He is a Professional Chartered Accountant (CA) and Cost Accountant (ICWA) having more than two-decades business experience in the field of finance.

Company’s capital adequacy ratio was 42.02% of which Tier 1 was 40.63% end December 2023

The Offer and the Objects

The initial public offer (IPO) consists of fresh issue of 1.1 crore equity shares to raise Rs 125 crore at the lower band of Rs 114 per share (face value Rs 10 per share) and Rs 132 crore at the upper band of Rs 120 per share.

The promoter shareholding in the company would decline to 41.6% post- IPO from 56.0% pre-IPO.

The issue is to be made through the book-building process and will open on 19 June 2024 and will close on 21 June 2024.

The company proposes to utilize the Net Proceeds from the Fresh Issue towards augmenting the capital base to meet future capital requirements. The company expects to receive the benefits of listing the Equity Shares on the Stock Exchanges, including to enhance brand image among existing and potential customers and creation of a public market for the Equity Shares in India.


The company serving rural and semi-urban areas is a highly under-served market with high growth potential. The loan portfolio in rural and semi-urban areas accounted for 61.2% of total credit portfolio end December 2023.

All loans are secured against collateral and involve monthly and quarterly loan repayment schedule with focus on stringent cash flow-based borrower assessments.

The company has adopted a calibrated approach towards diversifying fund raising sources and minimizing costs of borrowings with prudent asset liability management and effective liquidity management.

The company has implemented strong underwriting process and risk management policies.

The company strategically follow hub and spoke business acquisition strategy which helps to identify the customer needs effectively and respond with solutions. Hub and Spoke business model improves efficiencies and reduces costs.


The COVID-19 pandemic had a substantial impact on the business during FY21 and FY22, causing substantial decline in revenues, disbursements and AUM. The company is yet to achieve pre-covid level of business and earnings.

NPAs of the company are higher as compared to some of its peer companies

The business is concentrated in the State of Rajasthan having highest contribution of 69.39% to AUM end December 2023.

Further, 6 out of 12 branches and 19 out of 25 Point of sales (POS) are also located in Rajasthan, which exposes the company to any adverse geological, ecological, economic and/or political circumstances in Rajasthan.

The credit rating of the company at ACUITE BBB / Stable is low and any future downward revision in credit ratings could adversely affect ability to service debts as well as raise funds.

The company is facing various regulatory lapses, litigations and proceedings and any adverse outcome may significantly impact the company.

A significant number of customers are in the rural & semi-urban markets, which may have limited infrastructure and cause higher cost of operations.

A substantial portion of customers are first time borrowers which may have higher risk of non-payment or default.

In the vehicle finance business, there is potential risk due to decline in value of assets secured due to depreciation, deterioration, and/or a reduction in value on account of a number of factors.


Akme Fintrade is a small sized NBFC offering vehicle and business loans to rural and semi-urban customers in Rajasthan other 3 states in western India. The covid-19 had a significant impact on the business of the company in FY2021-22 and the business is yet to reach pre-covid levels. The small size and business concentration in few states is a major challenge for delivering sustainable strong growth.

EPS on post-issue equity for FY2023 works out to Rs 3.7 and Rs 3.8 (annualized) for 9MFY2024. At the upper price band of Rs 120, P/E works out to 32.4x for FY2023 and 31.4x for 9MFY2024.

Post-issue, the book value (BV) will be Rs 81.8, while adjusted BV (ABV) net of net NPAs works out to Rs 80.1 per share at the upper price band. The scrip is being offered at price to Adj BV multiple of 1.5 times at the upper price band.

Among some comparable NBFCs, Shriram Finance is trading at P/ Adj BV multiple of 2.4 times (consolidated basis), MAS Financial Services 2.9 times (consolidated basis) and CSL Finance 2.3 times (standalone basis).

In terms of PE, Shriram Finance is trading at 14.4x its EPS annualized for 9MFY2024, MAS Financial Services 21.0x and CSL Finance at 17.5x.

ROA of Akme Fintrade was at 3.9% for 9MFY2024. Shiram Finance posted a RoA of 3.2% for 9MFY2024 on consolidated basis, CSL Finance 7.0% and MAS Financial Services 2.8%.

ROE for Akme Fintrade was at 7.5% in the 9MFY2024 as compared with Shriram Finance at 14.8% (consolidated basis), CSL Finance 13.1% and MAS Financial Services at 13.3%.

The GNPA ratio of Akme Fintrade was at 3.94% end December 2023. Among the peers, the GNPA ratio of Shriram Financiers was at 5.66%, CSL Finance 0.40% and MAS Financial Services 2.23% end December 2023.

The NNPA ratio of Akme Fintrade was at 1.94% end December 2023, while that of Shriram Finance was at 2.72%, CSL Finance 0.23% and MAS Financial Services 1.48% end December 2023.

Akme Fintrade : Issue highlights

For Fresh Issue Offer size (in Rs crore)

- On lower price band


- On upper price band


Offer size (in no of shares crore)


Price band (Rs)


Minimum Bid Lot (in no. of shares )


Post issue capital (Rs crore)

- On lower price band


- On upper price band


Post-issue promoter & Group shareholding (%)


Issue open date


Issue closed date






Akme Fintrade: Financials

2103 (12)

2203 (12)

2303 (12)

2312 (9)

Income from operations





Other Income





Total Income





Interest Expenses





Other expenses





Gross profit















PBT Before EO










PBT after EO





Provision for tax















Adj BV (Rs)





*EPS annualized on post issue equity capital of Rs 42.67 crore of face value of Rs 10 each
Figures in Rs crore
Source: Akme Fintrade Issue Prospectus

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