Laxmi India Finance IPO Lists at 14% Discount Despite Strong NBFC Fundamentals

The non-banking financial company, Laxmi India Finance Limited, made a disappointing debut on BSE and NSE on August 5, 2025. After closing its IPO bidding between July 29 - July 31, 2025, the company commenced trading with a 13.92% discount on BSE and 12.96% discount on NSE, reflecting investor concerns about aggressive pricing despite strong MSME lending focus and robust financial performance.

Laxmi India Finance Listing Details

Laxmi India Finance Limited launched its IPO at ₹158 per share with a minimum investment of 94 shares costing ₹14,852. The IPO received moderate response with a subscription of 1.86 times - retail investors leading at 2.20 times, NII at 1.83 times, whilst QIB participation remained subdued at 1.30 times, indicating mixed investor confidence in the NBFC business model amid regulatory scrutiny.

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First-Day Trading Performance Outlook

Listing Price: The Laxmi India Finance share price opened at ₹136 on BSE and ₹137.52 on NSE, representing discounts of 13.92% and 12.96% respectively from the issue price of ₹158, delivering losses of approximately ₹1,928 per lot for investors and highlighting market scepticism about NBFC sector valuations.

Growth Drivers and Challenges

Growth Drivers:

Strong Financial Performance: Revenue surged 42% to ₹248.04 crore in FY25 with PAT jumping 60% to ₹36.01 crore, reflecting robust demand for MSME lending and operational efficiency improvements in the financial services sector.

Focused MSME Portfolio: Over 80% of MSME loans qualify as Priority Sector Lending with AUM of ₹12,770.18 million, serving underserved customer segments with loan amounts ranging from ₹0.05 million to ₹2.5 million.

Expanding Branch Network: Operating 158 branches across Rajasthan, Gujarat, Madhya Pradesh, and Chhattisgarh with strong regional penetration and customer base growth of 48.78% to 35,568 customers in FY25.

Diversified Funding Sources: Access to 47 lenders including 8 public sector banks, 10 private banks, 7 small finance banks, and 22 NBFCs, ensuring stable funding at competitive rates.
 

Challenges:

High Debt Leverage: Extremely high debt-to-equity ratio of 4.42 with total borrowings of ₹1,137.06 crore, creating significant financial leverage concerns and regulatory compliance challenges.

Aggressive Valuation Metrics: Trading at high P/E of 22.94x post-IPO with concerns about sustainability of current pricing levels in the competitive NBFC segment.

Regulatory Risk Exposure: Operating in heavily regulated NBFC sector with evolving compliance requirements and potential impact on lending spreads and operational costs.

Geographic Concentration: Heavy dependence on Rajasthan market with limited geographic diversification, exposing the company to regional economic fluctuations and competitive pressures.
 

Utilisation of IPO Proceeds

Capital Base Augmentation: ₹143 crore for strengthening capital base to meet future capital requirements towards onward lending, supporting business expansion and regulatory compliance in the NBFC sector.

Financial Performance of Laxmi India Finance

Revenue: ₹248.04 crore for FY25, showing impressive 42% growth from ₹175.02 crore in FY24, reflecting strong demand recovery and market expansion in the MSME lending segment.

Net Profit: ₹36.01 crore in FY25, representing substantial 60% growth from ₹22.47 crore in FY24, indicating improved operational efficiency and margin expansion despite competitive lending environment.

Financial Metrics: High debt-to-equity of 4.42, moderate RoNW of 13.95%, healthy PAT margin of 14.48%, strong EBITDA margin of 66.07%, Price to Book Value of 2.57, and market capitalisation of ₹825.83 crore.

While concerns over high debt leverage and aggressive valuation persist, the company's strong financial growth trajectory, focused MSME lending portfolio, expanding branch network, and diversified funding sources provide a foundation for continued expansion, though investors should monitor regulatory compliance and competitive positioning in the evolving NBFC sector.