ICRA Nepal assigns Grade 4 to the proposed 15% right issue of Pokhara Finance

ICRA Nepal Limited has assigned IPO Grade 4 rating to the upcoming 15% right share of Pokhara Finance Limited (PFL), indicating below-average fundamentals. The process of right share issuance is currently pending approval from Securities Board of Nepal (SEBON). PFL is proposing to come out with 15% rights issue of  983,682.74 numbers of equity shares of face value NPR 100/- each to be issued to its existing shareholders at par. As per Icra Nepal, The grading factors in PFL’s long track record (operating since 1997) along with the ability to maintain moderate portfolio growth (credit and deposits grew by CAGR1 of ~19% and ~16% respectively over last five years ending Jul-17) and healthy asset quality indicators (NPLs2 were 1.42% as of mid-Jul-17 vs. 13.37% for industry; delinquencies were ~11%). Comfortable capitalization levels, experienced management team and plans of expansion in uncovered regions are expected to provide PFL with adequate growth opportunities over the medium term. PFL had issued 9,83,682 units FPO shares worth Rs  21.64 crore at Rs 220 per unit on Shrawan 29, 2074. After the FPO, its paid up capital reached Rs 65.57 crore from Rs 55.74 crore. Finally, after proposed 15% right share issuance, its paid up capital will reach Rs 75.40 crore. As a national level finance company, it should hike its paid up capital to a minimum of Rs 80 crore by the end of FY 2073/74. Pokhara Finanace has earned Rs 1.48 crore net profit in the first quarter of the ongoing fiscal year 2074/75, ICRA Nepal assigns IPO grading on a scale of IPO Grade 1 through IPO Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals. For the grading categories 2, 3 and 4, the sign of + (plus) appended to the grading symbols indicate their relative better position within the grading categories concerned.