Despite the upbeat market sentiment, non-banking financial company (NBFC) Fusion Micro Finance had a lacklustre debut on November 15. The stock opened at a 2.3% discount to its issue price of Rs 368. The stock opened at Rs 360.50 on the BSE, while it was listed at Rs 359.50 on the NSE.

The stock was listed on November 2-4, with a subscription ratio of 2.95 times. The subscription ratios reserved for qualified institutional investors (QIB), retail investors, and non-institutional investors were 8.6 times, 0.5% and 1.38 times, respectively.

According to RHP, the company will use the proceeds of the offering to increase its capital base. Fusion Micro Finance provides financial services to underserved and underserved women in rural and peri-rural India. It has the fourth-fastest gross loan portfolio, with an average annual growth rate of 54% from FY2017 to FY21, according to CRISIL.

Analysts don’t appear to be bullish on the stock. “It derives most of its revenue from certain states (Bihar, Uttar Pradesh, Odisha, Madhya Pradesh, Tamil Nadu, Punjab, Rajasthan), and the business is exposed to interest rate risk, debt equity ratio,” said Narendra Solanki, head of equity research, Anand Rathi Shares & Stock Brokers.

They also said the company’s returns remained subdued in FY21-22 due to higher credit costs, with an average RoE of 2.6%. “Any unexpected shock to credit costs could significantly impact returns. We recommend investors who have secured a rights issue to book post-listing,” said Satish Kumar, research analyst at Choice Broking.