Fedfina shares list at over 1% discount, bounce back to trade over 3% higher

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Shares of Fedbank Financial Services, the NBFC arm of Federal Bank known as Fedfina, listed at a discount of 1.43 per cent at ₹138 on the NSE, against the issue price of ₹140.

While analysts were expecting a low premium listing for Fedfina given the muted investor response compared with other IPOs during the week, the discounted listing caught some market participants off guard.

“A flat or negative listing is a possibility, and investors should be prepared for the potential for short-term losses,” Shivani Nyati of Swastika Investmart had said.

The ₹1,092-crore IPO of the NBFC was subscribed 2.2 times, with the qualified institutional buyers (QIB) portion being booked 3.51 times, retail portion 1.82 times and non-institutional investors category being subscribed 1.45 times.

Bounce back

However, the stock bounced back after the first hour of trade to recover all losses and touch an intraday high of ₹148.25. It later pared some gains to trade around 4 per cent higher at ₹143.50. A total of 3.03 crore shares of the company have been traded so far.

The IPO was open for bidding between November 22-24 in a price band of ₹133-140 per share. It comprised a fresh issue of equity shares of up to ₹600 crore and an offer-for-sale (OFS) of shares worth ₹492.26 crore. Under the OFS, 1.64 crore equity shares were offloaded by Federal Bank and 5.38 crore shares by True North Fund VI LLP.

ICICI Securities, BNP Paribas, Equirus Capital and JM Financial acted as the book-running lead managers to the issue, while Link Intime India Private Ltd was the registrar.

Fedfina has the third lowest cost of borrowing among peers, and the third highest AUM growth. It focuses on the underserved MSME and self-employed segment, and offers gold, loans against property and personal loans.

“On the flip side, the company faces the risk of asset-liability mismatches affecting liquidity, potentially impacting operations and profitability. Historical negative cash flows and concentration of operations in specific regions pose challenges,” SMC Global Securities had said in a note.