RATING

RECOMMENDATION

Sell

  • ROFR Required
  • Available in Depository:

  • NSDL

  • CDSL

  • Available for Investment:

  • Primary

  • Secondary

RATING

RECOMMENDATION

Sell

Business Type

Traditional Business

RATING

RECOMMENDATION

Sell

Business Type

Traditional Business

Discover and get a complete analysis on SMILE Microfinance Pre IPO - Management, Business Model, Financials, Growth, Valuations, Funding Rounds, News and get latest updates on SMILE Microfinance Financial Statements.

ISIN

INE786V01012

Face Value

₹10.00

Total Share

1,73,39,693

Total Income

₹58.60 Cr

Profit After Tax

-₹8.88 Cr

EPS

-₹5.12

P/E

-13.28

P/B

0.84

Market Capitalisation

₹117.91 Cr

Enterprise Value

₹471.46 Cr

Book Value

₹80.85

Intrinsic Value

₹295.90

Earnings Yield

-7.53 %

Sector

Financials

Sub-sector

Consumer Finance

Category

Micro Cap

Cashflow - Operations

₹134.42 Cr

Cashflow - Financing

-₹134.40 Cr

AUM

₹478.80 Cr

AUM Growth

-21.05 %

SMILE MICROFINANCE Growth

Compounded Sales Growth

  • -15.53%

    1 Year

  • 16.58%

    5 Year

  • 4.64%

    9 Year

Pro Only

Compounded Profit Growth

  • NA

    1 Year

  • NA

    9 Year

Pro Only

Return On Equity

  • -6.33%

    2021

  • 9.46%

    2017

  • 3.56%

    2013

Pro Only

About SMILE MICROFINANCE

  • S.M.I.L.E Microfinance is a non-banking-finance company (NBFC), registered with and regulated by the Reserve Bank of India. 
  • The company is primarily engaged in providing microfinance services to Women from poor segments of urban/rural Tamilnadu and adopts Joint Liability Model(JLG) model to provide unsecured loans to the members. The model ensures credit discipline through weekly, fortnightly, monthly meetings to make sure individual members are diligent in utilizing the loan and are prompt in repaying their loan.
  • The company SMILE Microfinance has presence across 7 states with a portfolio outstanding of INR 606 Cr, managed through a network of 144 branches and a team of more than 880 employees.
  • It is the first Chennai based Microfinance Institution (MFI) to set up MFI operations and obtained license from RBI in 2015  and has a first mover advantage.
  • The company launched its operations to provide credit services in 2004. In 2006, the Company got registered as a non-deposit accepting Non-Banking Financial Company (‘NBFC-ND’) with the RBI. 
  • S.M.I.L.E. Microfinance Limited operates as a subsidiary of DWM Investments (Cyprus) Limited.

  • SMILE MICROFINANCE IPO Details

As of Mar'21 company has no plans to get listed.

  • SMILE MICROFINANCE Funding

Funded By Funding Amount Date of Investment Funding Round Fund Name
DWM Asset Management, LLC; DWM Microfinance Equity Fund ₹ 500 M 21 Dec 2009 Private Growth capital
  • SMILE MICROFINANCE Merger & Acquisition

Acquisition

  • On February 24, 2022 Northern Arc Capital Limited entered into a agreement to acquire S.M.I.L.E. Microfinance Limited. In this acquisition Ernst & Young LLP acted as financial advisor to S.M.I.L.E. Microfinance Limited.
  • SMILE MICROFINANCE Subsidiaries

  • The company doesn't have any subsidiary or associate company.

SMILE MICROFINANCE Business Model

  • The company provides group loans/micro/small business loans to women, for income generating activities. The company has created this product with an intention to build deeper relationships with clients who want to grow their businesses, and at the same time expand the client base by reaching out to new clients. 
  • SMILE offers different loan products to generate income and meet their working capital requirement which includes IGP loan, AIGP loan.
  • Through IGP loan, company provides loan in the range of Rs.15000 to Rs.50,000 for the purpose of livelihood.
  • Through AIGP loan, company provides loan in the range of Rs.5000 to Rs.10,000 for the purpose of meeting working capital requirement.
  • In FY20 company also started providing education loan and family function loans, under JLG and Non-JLG-Non IGP product segment.
  • SMILE MICROFINANCE Revenue Segmentation

  • Interest Income
  • Other Income
  • Commission
  • Profit on sale of assets
  • Profit on sale of investment
  • SMILE MICROFINANCE Product & Services

  • IGP Loan- Income generation program loan
  • AIGP Loan- Additional IGP loan
  • Education loan under
  • Loan for family function
  • SMILE MICROFINANCE Assets

As of 31st Mar'21 the company has total assets of worth 186.52 Lakhs.

AssetsAmount in Rs.
leaseholds Improvements8.39 Lakhs
Computer Equipment54.96 Lakhs
Furniture and Fixture11.32 Lakhs
Office Equipment10.82 Lakhs
Vehicles14.68 Lakhs
Server and Networking11.08 Lakhs
Computer38.07 Lakhs
Right of use-lease hold building37.20 Lakhs


  • SMILE MICROFINANCE Industry Overview

Industry Statistics

  • Microfinance, or micro-credit, typically comprises very small-sized loans extended to an individual or a group of individuals, which are called self-help groups (SHGs). Borrowers are generally from the weaker sections of society.
  • India is the largest microfinance market in the world, with the sector growing at an average rate of over 50%. Consequently, it is attracting domestic and foreign investors and new players, who are hoping to practice profitable philanthropy.
  • Banks remained the largest lender of microfinance at 42%, followed by NBFC MFIs at 32% of the gross loan portfolio and small finance banks (SFBs) at 19% as of March 31st 2021. 
  • According to the Intellecap study, the market size for microfinance in India is in the range of 5.8 to 7.7 Cr. clients, assuming the entire poor population of the country represents potential clientele. This translates to an annual credit demand of INR 42,180 Cr. to INR 1.4 Lakh Cr., assuming loan sizes range between INR 7400 and INR 18,500.
  • The NBFCs-MFl industry has a microloan portfolio of INR.77,574 crores at the end of March 21 registering a year-on-year (y-o-y) growth of 10.1%. There are 86 NBFC-MFI registered with RBI as on date.
  • The coronavirus pandemic has caused havoc in every industry around the world. The ramifications of the unprecedented transformation of organisational functioning to the total or complete shutdown of many businesses have been severe. The microfinance sector, which suffered a significant negative impact on asset quality following demonetization in 2016, is once again one of the most affected sectors in the economy.
  • COVID-19, according to the Investment Information and Credit Rating Agency of India (ICRA), may put a strain on the liquidity and asset quality profiles of microfinance institutions (MFI), as well as their ability to pay interest on borrowings.
  • While the microfinance sector has demonstrated resilience in the past by surviving various natural calamities, such as the AP crisis and, more recently, the Assam crisis, demonetization, and so on, it has yet to emerge victorious. Though the impact of covid is going to be greater, analysts are confident that the industry may recover and resume its path to glory.

Future Prospects

  • The penetration of MFIs in India continues to remain low, which present a higher potential for growth in the medium term. Relatively underpenetrated states, such as Uttar Pradesh, Uttarakhand, Himachal Pradesh may drive future growth along with some of the moderately penetrated states, such as Rajasthan, Chhattisgarh, Haryana, Punjab and Jharkhand.
  • India microfinance market is anticipated to grow at a brisk CAGR of more than 40% through 2025, predominantly on account of increasing demand for microfinance loans from the MSME sector. The main objective of microfinance organizations is to give a chance to low-salary borrowers to become self-sufficient.
  • As India aims to become a USD 5 trillion economy by 2025, the microfinance industry may play a leading role in uplifting the lives of millions of low-income households and enabling them to contribute to the country’s economic growth.

Government Initiatives

  • The Reserve Bank of India (RBI), the country’s central bank, has urged banks to opt for the SHG model to lend to over 3 Cr small and micro units, to ensure they have easy access to funds.
  • The Reserve Bank of India has proposed streamlining regulations by shifting from institution-based regulation to activity-based regulation. This bodes well for microfinance lenders, putting them on a level playing field, improving last-mile credit delivery, strengthening consumer protection, and resulting in higher margins for the Company.
  • The Government of Assam has recently passed “The Assam Micro Finance Institutions (Regulation of Money Lending) Bill, 2020”. The Bill comes with the objective of creating an effective mechanism to regulate Micro Finance lenders in Assam in the wake of the protests against them in terms of over-lending, exorbitant interest rates and coercive recovery practices
  • On May'13 2020 Government of India sanctioned Rs. 450 billion partial credit guarantee scheme to cover primary issuances by NBFIs, HFCs, and MFIs. Government of India to bear first 20% loss as a guarantor.

SMILE MICROFINANCE Strengths

  • The company operates 144 branches in seven Indian states, including the Central Indian states of Chhattisgarh, Jharkhand, Madhya Pradesh, and Karnataka in South India. This demonstrates that the company has a stable base throughout the country.
  • Many government regulations benefit the MFI industry, which may be helpful to the firm. For example, the RBI has allowed MFIs the authority to establish the interest rates they charge borrowers, with the condition that the rates must not be usurious, allowing businesses to make reasonable decisions.

SMILE MICROFINANCE Shortcomings

  • The company has very low amount of loan disbursed i.e, worth Rs.334.05 Cr, which is significantly lower in comparison to its peers and previous years.
  • Asset under management of the company is Rs.475.8 Cr,which is declining from past 2 years and even is significantly lower than its peers.
  • The company was not able to handle covid situation properly and has shown notable downtrend.

SMILE MICROFINANCE Opportunities

  • The NBFCs-MFI industry has a gross microloan portfolio of Rs 2.43 lakh crore September 30, 2021, registering a y-o-y growth of 5.16%. MFI industry is growing at a rapid pace, this may open many opportunities for the company.
  • Microfinance industry has a huge potential in the country with a population of ~130 crore. At pan-india level, micro credit reaches to not more than 20% of the total deserving households through variety of channels, including Banks, SFBs and MFls. Given the extent of financial exclusion, MFIs have more opportunity to tap.
  • Digital Transformation initiatives have the potential to change the business models to keep up with changing customer expectations, which companies like SMILE are fully set to be in the forefront of this fundamental change.

SMILE MICROFINANCE Threats

  • The continuation of pandemic can adversely affect the collections in the asset classes of microfinance as the same. As per Acuite Ratings, the collections of MFIs and smaller NBFCs drop to 65-85% in Q1 FY22.
  • The overcrowding in the sector may increase the over indebtedness of the borrowers in the long run and increase the delinquency levels.
  • Following the prolonged lock down restrictions and moratorium, the MFI sector began to recover. The efficiency of collection has been increasing. However, the Covid 2nd Wave and the predictions for the 3rd Wave have raised new concerns.
  • The company has been predominantly operating in Tamil Nadu, which ahs been severely impacted by COVID-19. Though the State has a high demand for microcredit loans and good credit culture, there is urgent need to reduce the concentration risk.
  • The company faces a stiff competition from other microfinance institutions like Equitas Small Finance, ESAF Microfinance, Fusion Microfinance, Annapurna Microfinance, Muthoot Microfinance etc. Also the company is offering only single product line and with increasing competition, product lines need to be expanded further. 
  • Raising funds in the current scenario may become a challenge for the company as lenders may take a cautious approach in taking exposure to such investments
SMILE MICROFINANCE Rating

  • RECOMMENDATION

    Sell

  • SMILE MICROFINANCE Detail Info

Industry Statistics

PUBLIC LIMITED

Registered In

India

last Updated

05/08/2021

Registered Date

21/03/1995

Planify Ticker

smltd

Reg Office: 14/25, Chakrapani Street,West Mambalam, Chennai , Tamil Nadu 600033.

Website Visit

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