Laxmi India Finance IPO Opens July 29: Rs 254.26 Cr Issue Taps Underserved Credit Markets

Laxmi India Finance is launching its initial public offering (IPO) with a total issue size of Rs 254.26 crore through the book-building route. The offer comprises a fresh issue of 1.05 crore equity shares aggregating to Rs 165.17 crore, and an offer for sale (OFS) of 0.56 crore shares amounting to Rs 89.09 crore.

The IPO will open for subscription on July 29, 2025, and close on July 31, 2025. The basis of allotment is expected to be finalized on Friday, August 1, 2025, and the stock is proposed to be listed on the BSE and NSE, with a tentative listing date set for Tuesday, August 5, 2025.

The price band for the IPO is fixed at Rs 150 to Rs 158 per share, with a lot size of 94 shares. Retail investors will need to invest a minimum of Rs 14,100, while the minimum application size for sNII (small non-institutional investors) is 14 lots (1,316 shares) worth Rs 2,07,928, and for bNII (big non-institutional investors) it is 68 lots (6,392 shares) amounting to Rs 10,09,936.

PL Capital Markets Private Limited is acting as the book-running lead manager for the issue, while MUFG Intime India Private Limited (formerly Link Intime) is the registrar.

See details below:

Use of Proceeds and Promoter Details:

Laxmi India Finance plans to utilise the net proceeds from the IPO primarily for strengthening its capital base. The company aims to deploy Rs 143 crore from the fresh issue proceeds for the following objective:

The funds are intended to support the company’s growth by enhancing its ability to extend credit and scale its lending operations.

Promoters: Deepak Baid, Prem Devi Baid, Aneesha Baid, Hirak Vinimay Private Limited, Deepak Hitech Motors Private Limited, Prem Dealers Private Limited, and the Vivan Baid Family Trust.

Company Profile:

Laxmi India Finance Limited, incorporated in 1996, is a Rajasthan-based NBFC focused on providing secured credit to small businesses and individual borrowers, primarily in underserved regions. Its diversified loan portfolio includes MSME, vehicle, and construction loans, with over 80 per cent of its MSME loans qualifying as Priority Sector Lending.

The company offers secured MSME loans ranging from Rs 0.05 crore to Rs 2.5 crore, and vehicle loans for commercial vehicles, two-wheelers, and tractors.

As of March 31, 2025, LIFL had an AUM of Rs 1,277.02 crore, with MSME and vehicle loans comprising over 92 per cent of the total. The customer base grew 49 per cent YoY to 35,568, with 37 per cent being first-time borrowers. The company operates through 158 branches across four states, primarily Rajasthan, and is backed by 47 lenders, including public and private sector banks, SFBs, and NBFCs.

Industry Outlook:

India’s systemic credit is projected to reach Rs 300 lakh crore by FY27, growing at a CAGR of 12–13 per cent. NBFCs are expanding their share from 17 per cent in FY19 to 19 per cent in FY24, and an expected 20 per cent by FY27, driven by strong demand in under-penetrated rural and semi-urban areas. Retail credit has grown from 21.6 per cent in FY19 to a projected 32.1 per cent in FY25, reflecting a shift toward low-risk consumer lending.

NBFCs’ gross credit stood at Rs 45 lakh crore in FY25 and is expected to rise to Rs 58.5–60.5 lakh crore by FY28, growing at a CAGR of 14–16 per cent. Asset quality has improved, with gross NPAs declining from 6.8 per cent in FY20 to 4.0 per cent in FY24, and a further drop to 3.8 per cent projected in FY25.

In MSME lending, NBFCs’ AUM is expected to surpass Rs 6 lakh crore by FY27, growing at a CAGR of 20–22 per cent. Commercial vehicle lending is projected to grow at 9–11 per cent CAGR, passenger vehicle financing at 15–17 per cent, and two-wheeler financing at 16–18 per cent. Construction and wholesale lending are also expected to benefit from rising infrastructure investments and NBFCs’ niche presence in underserved markets.

Financials:

(Source – Company’s RHP)

Balance Sheet Snapshot

(Source – Company’s RHP)

Key Metrics - Operational

(Source – Company’s RHP)

Key Financial Ratios

Listed Peer Comparison 

Strengths:
Laxmi India Finance Limited (LIFL) has a strong niche in underserved segments, primarily MSME and vehicle loans, with 81 per cent of FY25 revenue from MSME lending. It focuses on small-ticket, secured loans (Rs 0.05–2.5 crore), reducing default risk. The company’s AUM grew at a 36.36 per cent CAGR from FY23 to FY25, while PAT grew 56.98 per cent CAGR, supported by a diverse funding base of 47 lenders and reduced borrowing costs (from 13.31 per cent to 12.02 per cent). LIFL maintains strong asset quality (GNPA 1.07 per cent, NNPA 0.48 per cent) and operates 158 branches across five states. Backed by experienced leadership and a well-governed board, it also holds a robust CRAR of 20.80 per cent.

Weaknesses & Risks:
LIFL’s growth is dependent on consistent access to capital; any funding disruption could impact operations. IPO proceeds lack third-party appraisal, and past negative cash flows raise sustainability concerns. Equity shares were issued to promoters at lower valuations in recent years, possibly raising governance flags. The loan book is regionally concentrated and exposed to lower-income segments, increasing vulnerability to economic shocks. Operational risks like cash fraud and audit qualifications also persist. Additionally, asset-liability mismatches, pending title transfers, and reliance on promoter guarantees may affect long-term credibility and financial health.

Valuation & Outlook:
Laxmi India Finance Limited (LIFL) operates with a strong niche focus on MSME and vehicle financing, particularly in underbanked rural and semi-urban markets. At the upper price band of Rs 158, the IPO values the company at Rs 826 crore, translating to a P/E of 23x based of FY25 earnings and extended capital (fresh issue) and P/B of 1.95x, with post-issue ROE of 8.48 per cent and ROA of 2.64 per cent. These metrics place it between lower-ROE peers like UGRO and SBFC Finance, and premium players like Five Star Business Finance, which enjoy superior return ratios and valuation multiples.

The company plans to utilize Rs 143 crore from the IPO proceeds to strengthen its capital base and support future lending growth. While Laxmi Finance has demonstrated consistent AUM expansion, improving margins, and stable provisioning practices, its return ratios remain modest, and a marginal decline in asset quality warrants caution.

Despite these limitations, the company’s targeted lending model, secured loan book, and operational footprint in credit-starved regions offer scalability potential. As LIFL continues to adopt technology, reduce NPAs, and optimize its funding mix, there is room for improvement in return metrics and operating leverage. That said, the current valuation already factors in a fair amount of optimism, limiting near-term upside unless earnings growth meaningfully accelerates.

Recommendation:
Given the current valuation and operational metrics, we recommend an "Avoid for Now" stance on the IPO. Investors may consider adding the stock to their watchlist and look for better entry opportunities post-listing, especially if the company demonstrates sustained improvement in ROA, ROE, and asset quality. While Laxmi Finance offers exposure to the expanding rural credit cycle and MSME lending opportunity, its current scale, regional concentration, and modest return profile suggest limited near-term re-rating potential. Long-term investors should reassess after a few quarters of post-IPO performance and financial delivery.