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DRChoksey Report
The initial public offering of Turtlemint Fintech Solutions Ltd. launched today, June 19 and the offer closes for subscription on June 23. The company has fixed the price band at Rs 144-Rs 152 per share.
Turtlemint Fintech Solutions IPO is a book-built issue worth Rs 882.67 crore, comprising a fresh issue of 4.35 crore shares valued at Rs 660.72 crore and an offer-for-sale (OFS) of 1.46 crore shares worth Rs 221.95 crore.
The IPO allotment is expected to be finalised on June 24, while the shares are scheduled to list on the NSE and BSE on June 29.
Investors can apply for a minimum lot size of 98 shares. At the upper price band of Rs 152, the minimum investment required for retail investors is Rs 14,896.
ICICI Securities Ltd., Jefferies India Pvt.Ltd. JM Financial Ltd, Motilal Oswal Investment Advisors Ltd. are the book-running lead manager for the issue, while Kfin Technologies Ltd. has been appointed as the registrar.
Objects of the Offer
- To fund Technology, Infrastructure, Growth and working capital requirements.
Valuation:
At Rs 144-152, Turtlemint set to list at a market cap of Rs 4,275-4,476 crore. The company is loss-making at every reported P&L level hence Price/Revenue is the operative metric. At the cap price of R 152, the offer is priced at 6.4x FY25 proforma revenue, compressing to 3.8x on our FY28E base case revenue of Rs 1,166 crore.
PB Fintech the only listed Indian comparable, trades at 15.3x FY25 trailing price/revenue at a market cap of Rs 76,076 cr; profitable, 7x larger, and carrying a richer product mix.
Turtlemint at 6.4x implies a 58% discount to PB Fintech on trailing revenue, which is the entry point investors are being offered.
The brokerage's FY28E estimates : Revenue Rs 1,166 cr, PAT Rs 115 cr, EPS Rs 3.91, the stock trades at 3.8x forward Price/Revenue and 38.9x forward P/E at Rs 152. Subscribe for listing gains.
The discount to PB Fintech and the absence of any other listed vehicle for India's PoSP-driven insurance distribution build-out support near-term demand at listing.
The long-term case requires two consecutive quarters of declining partner acquisition cost ratios and crosssell revenue meaningfully above the current 1-2% of consolidated revenue before the FY28E profitability assumptions become defensible.
Key Risks:
- Concentration risk.
- Jio Financial Services
- Bima Sugam commission compression
- Partner acquisition cost structure
- OFS and promoter selling
- Valuation markdown.
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