IPO shares - Overview of Naya Nepal Laghubitta Bikash Bank Limited (NNLBBL)

Dhulikhel based Naya Nepal Laghubitta Bikash Bank Limited (NNLBBL) is issuing IPO from 3rd October 2013 till 7th October 2013. NLBBL a D class micro finance company which is licensed to operate in 10 districts of mid and eastern region of the country. It is issuing 60,000 units of share worth Rs.6,000,000 for the ordinary public -including 1,200 units for the staffs of the company and 3,000 units for the mutual funds. However, no mutual funds have applied for the shares. An investor can apply for minimum 50 units and maximum for 5,000 units.

The authorized capital of the company is Rs.40,000,000. The issued capital is Rs.20,000,000. The promoters have invested Rs.14,000,000 (70%) while shares worth Rs.6,000,000 is being floated to ordinary public after which the paid up capital will be raised to Rs.20,000,000. NNLBBL is promoted by individual who have previously worked at Agricultural Development Bank Limited, Sana Kishan Bikash Bank Limited and other organizations.

The financials of the bank as of 4th quarter 2069/70 are as follows:

Paid up Capital:Rs.14,000,000

Reserve and Surplus:Rs.2,437,000

Net Profit:Rs.1,410,000

Earning Per Share:Rs.10.07

Net Worth Per Share:Rs.117.41

The bank has no plans to increase it paid up capital till the fiscal year 2072/73 so the shareholders can expect only cash dividend. It has projected to offer 12% returns to its shareholders in the F.Y. 2070/71, 15% in F.Y. 2071/72 and 17% in F.Y. 2072/73.

The size of the IPO is very small i.e. 60,000 units only and with the charm toward the shares of micro finances and the liquidity in the banking system we can expect this IPO to be over subscribed by many many folds, therefore the allotment of share is going to be low. I would recommend the investors to invest in this script if they have some funds at disposal, however, investing by taking loans might not be a good idea.
-Freak Money