Utkarsh Small Finance Bank IPO opened for subscription today. The Varanasi-based lender mopped up Rs 222.75 crore from 20 anchor investors ahead of the initial share sale. It finalised the allocation of 8.91 crore equity shares to anchor investors, at an upper price band of Rs 25 per share
Utkarsh Small Finance Bank IPO opened on Wednesday, July 12, 2023, and bidding will close on July 14. The anchor book, the part of qualified institutional buyers, was opened on July 11. Up to 75% of the issue size is reserved for qualified institutional buyers, 15% for high net-worth individuals (HNIs), and the balance 10% for retail investors
The small finance bank has set the price band for its issue at Rs 23-25 per share. The bank plans to raise Rs 500 crore from its offering that comprises only fresh issue portion. The lender will utilise net issue proceeds for augmenting its Tier - 1 capital base to meet its future capital requirements, besides issue expenses
Investors can bid for a minimum of 600 equity shares and in multiples of 600 shares thereafter. Hence, the minimum investment by retail investors in the public issue would be Rs 15,000 for one lot and the maximum investment would be Rs 1.95 lakh for 13 lots
Utkarsh Small Finance Bank has reported healthy financials with deposits in FY23 growing 36% to Rs 13,710 crore compared to the previous year, disbursements increasing 37.5% to Rs 12,443 crore and gross loan portfolio rising 31.3% to Rs 13,957 crore in the same period. Profit for the financial year ended March FY23 surged significantly by 558% to Rs 404.5 crore, with fall in provisions and contingencies and healthy net interest income
Majority of the brokerage firms are positive on the issue and suggest to subscribe to it on a long-term basis, citing its attractive pricing, strong balance sheet and sound business fundamentals. However, select analysts have flagged geographical concentration as the key threat to its business
"Utkarsh SFB is in constant efforts to improve its business with deeper insights into customer trends, and develop customised products for its customer segments. With improvement in NIM's and NPAs in declining trend over the last three years, growth in earnings remains strong. On FY23 financials, the IPO is valued at 6.8 times P/E and 1.1 times P/BV, we recommend 'subscribe' to this issue for the long term," Reliance Securities said
"At the upper price band, the company is valuing at P/B of 1.39 times with a market cap of Rs 2,740 crore post issue of equity shares and return on net worth of 20.22 per cent. We believe that the company is fairly priced and recommend a 'subscribe- long term' rating to the IPO," said Anand Rathi Shares and Stock Brokers
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. The IPO is priced at a reasonable valuation, and the company has a strong balance sheet. However, there are some risks to consider, such as the competitive landscape and the potential for asset quality problems. Overall, we believe that the IPO is a good opportunity for investors who are looking for exposure to the growth of the SFB sector," said Swastika Investmart with 'subscribe' rating
"Utkarsh SFB is favorably placed with presence in low ticket segments having strong industry tailwinds. Its valuation on a P/B basis is at a significant discount compared to peers, at 1.1x FY23 post issue BVPS. Considering that the micro finance industry has come out of severe crisis over 2020-22, with most of the bad loans having weeded out of the system, we expect growth and healthy profitability to resume for the sector as well as for Utkarsh," said Nirmal Bang Securities with a 'subscribe' tag on the issue
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