Utkarsh SFB hits upper circuit after 60% listing pop, Is it time to book profits?

Shares of Utkarsh Small Finance Bank made a strong debut at Dalal Street on Friday and saw further follow-up buying during the session. The latest debutant of Dalal Street was locked in the buyer's circuit for the day as there were no sellers for the counter and buyers queued up for the counter.

Utkarsh Small Finance Bank kicked-off its maiden trading session at Rs 40 on the National Stock Exchange (NSE), 60 per cent above its issue price of Rs 25. The scrip made its debut at Rs 39.95 on the BSE, a premium of slightly below to that of NSE at 60 per cent.

After a strong listing pop, the scrip hit an upper circuit of 20 per cent to Rs 48 on NSE, extending the overall gains to 92 per cent over the issue price of Rs 25. The scrip was locked in the buyer's circuit at BSE too at Rs 47.94, up 92 per cent over the issue price. The scrip tested lows of Rs 37.20 during the day.

Following the stellar rise of new debutant, investors are confused if they should hold the stock for a long run or exit the counter at existing levels. Also, those who did not receive allotment, are boggled if they should enter the stock at current or higher levels.

Utkarsh Small Finance Bank has wide geographical footprints predominantly in the state of Bihar and Uttar Pradesh. The Bank operates in 26 States in India and caters to customers located primarily in Unbanked & Under banked areas. The Bank recorded Rs 6,000 crore gross loan portfolio, said Mahesh M Ojha – AVP Research at Hensex Securities.

"Summing up, we believe the Bank has Good Growth Potential compared to the listed peer. The Bank Today on the listing day is trading at almost 60 per cent premium, We suggest investors shall book partial, say 50 per cent, profits on the listing day itself. Rest investment can be kept for medium to long term," he added.

Utkarsh Small Finance Bank raised Rs 500 crore from its primary stake sale as the issue was sold in the range of Rs 23-25 apiece with a lost size of 600 equity shares. The issue was entirely a fresh sale of 20 crore equity shares, which was open for subscription between July 12-14.

The issue was overall subscribed a whopping 110.77 times. The quota for qualified institutional buyers (QIBs) saw 124.85 times bidding, while the allocation for non-institutional investors (NIIs) fetched 81.64 times bids. The portion for retail investors was booked 72.10 times and the employee category got 16.58 times subscription.

The Utkarsh Small Finance Bank IPO made a strong debut on the stock exchanges today, in line with the expectations. The company has a strong track record of growth, and its financial performance has been improving in recent years, said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

"Utkarsh SFB is well-positioned to benefit from the growth of the SFB sector, as it has a strong focus on underserved segments of the population. After listing at such a level, we will suggest booking this gain; however, aggressive investors can choose to buy during any subsequent dip," she said.

Varanasi-headquartered Utkarsh Small Finance Bank 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.

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