The initial public offering (IPO) of Utkarsh Small Finance Bank continued to attract strong demand on second day (Day 2) of the bidding process. The Rs 500-crore issue was subscribed 16.20 times on Day 2. The issue closes on Friday. The small finance lender is selling its shares in the range of Rs 23-25 apiece. The IPO is entirely a fresh sale of 20 crore equity shares and investors can make a bid of a minimum of 600 equity shares and its multiples thereafter.
As per BSE data, the issue received 1,95,26,93,400 today against the issue size of 12,05,43,477 shares. The quota for retail investors was booked 36.66 times, the non-institutional investor (NIIs) category fetched 27.72 times of the total bids. The portion reserved for employees was subscribed 8.48 per cent and qualified institutional buyers saw 3.88 times subscription.
Brokerages have given 'Subscribe' rating to the IPO with a long-term view, citing its attractive pricing. Although, an analyst also suggested booking profits on the listing day if the gains are above 25 per cent.
"At higher price band (Rs 25), the stock is valued at 1.8(x) P/BVPS with current book value per share of Rs 18. We recommend 'Subscribing' to the issue," said LKP Securities.
Arihant Capital Markets assigned a 'Subscribe for Long term' rating. "The company has displayed exceptional performance in FY23 and stands strong among its competitors with the highest liquidity coverage ratio and second lowest net NPA (non-performing asset) in FY23. Going forward the company plans to expand its operations in the newer western and southern regions of the country," it said.
Canara Bank Securities gave a 'Subscribe' tag. "The issue is available at P/BVPS of 1.12 times, which is lower as compared to peer competitors; however, performance of net interest margin in future as it could see pressure due to increase in cost of funds," it stated.
"We recommend investors 'Subscribing' to the issue with a long-term perspective as well as healthy listing gains. With optimistic market sentiments, if investors get any listing gains over and above 25 per cent, we recommend booking profits on the said day," said Rajan Shinde Research Analyst at Mehta Equities.
Latest grey market premium
Utkarsh SFB shares were last seen trading with up to 60 per cent grey market premium (GMP) of Rs 15 today.
Ahead of its IPO, Utkarsh SFB allocated 8.91 crore equity shares to 20 anchor investors at an issue price of Rs 25 apiece to garner Rs 222.75 crore. SBI Mutual Fund, ICICI Prudential, Kotak Mahindra Trustee, Aditya Birla Sun Life Trustee, Goldman Sachs, SBI Life Insurance, Edelweiss Trusteeship, Founders Collective Fund and AG Dynamics Funds participated in the anchor book.
ICICI Securities and Kotak Mahindra Capital are the book-running lead managers to the issue, while Kfin Technologies has been appointed as the registrar. Shares of the lender are expected to get listed on both BSE and NSE with July 24 as the tentative date of listing.
Incorporated in 2016, Utkarsh SMB has recorded the second-fastest AUM (Asset under management) growth in the financial year 2018-19 (FY19) and FY22. The private lender has an AUM of more than Rs 6,000 crore.
The Varanasi-based firm has operations across 26 states and Union Territories with 830 banking outlets and 15,424 employees as of March 31, 2023. It had a 3.59 million customer base majorly located in rural and semi-urban areas primarily in Bihar and Uttar Pradesh.