Suryoday Small Finance Bank’s public offer was subscribed 77 percent by noon on March 18, the second day of bidding, receiving bids for 1.04 crore equity shares against the issue size of 1.35 crore equity shares.
Retail investors put in bids 1.54 times more than their reserved portion, while the part set aside for non-institutional investors (NII) has seen a 13 percent subscription and that of employees 9 percent.
The qualified institutional buyers subscribed 1,372 equity shares so far. Around 37.18 lakh equity shares have been reserved for them.
The Rs 581 crore IPO that opened on March 17 comprises a fresh issue of around Rs 247 crore and an offer for sale of Rs 334 crore by existing selling shareholders. The small finance bank (SFB) raised Rs 170 crore from anchor investors on March 16.
Incorporated in November 2008, Suryoday is among the leading SFBs in India in terms of net interest margins, return on assets, yields and deposit growth and had the lowest cost-to-income ratio among SFBs in India in FY20.
After receiving small finance bank license in 2017, the company has consistently grown on advances as well as deposits front, with stable asset quality and improved secured loans contribution to total advances, said Canara Bank Securities.
SSFB is available at a P/B of 2.28x for 9MFY21, which is fairly valued among the listed small finance banks, the brokerage said. It recommended ‘subscribing’ to the issue for long-term gains.
Do read what Moneycontrol’s in-house research team has to say about Suryoday Small Finance Bank IPO
The major reason for the IPO launch is the Reserve Bank of India’s stipulation that requires all small finance banks to list on exchanges after three years of getting a banking licence.
The small finance bank has grown at a CAGR of 29 percent from FY17-FY20, in terms of assets under management (AUM). Top three SFBs accounted for 63 percent of the total SFB AUM in FY20, compared to 55 percent in FY17. These top three SFBs recorded a CAGR of 35 percent during FY17-FY20.
The bank has a strong credit function that comprises a team of 83 individuals as of December 2020, each of whom have experience in the banking and financial services industry, said Canara Bank Securities, adding Suryoday SFB has an established risk management framework to identify, assess, monitor and manage risk.
The bank has witnessed rapid growth in deposits between FY18-FY20. Their deposit base has grown at a CAGR of 94.95 percent from Rs 749.52 crore as of March 2018 to Rs 2,848.72 crore as of March 2020 and was Rs 3,343.84 crore as of December 2020. As of December 2020, its deposit base represented 69.22 percent of its overall funding profile.
As of December 2020, its customer base was 1.44 million and it had 4,770 employees who operated 554 banking outlets, including 153 unbanked rural centres.
News Source:- Moneycontrol