The Rs 518-crore initial public offering (IPO) of Equitas Small Finance Bank – a subsidiary of Equitas Holdings – opens today and will be available for subscription till Thursday, October 22. The Chennai-based small finance bank (SFB) has a price band fixed Rs 32-33 per share. Investors can bid for a lot of 450 equity shares and multiples thereof.
At the upper price band, investors will need to give out Rs 14,850 to get a single lot of Equitas Small Finance Bank. The shares will be listed on both BSE and the National Stock Exchange (NSE).
The IPO comprises a fresh issue of Rs 280 crore and an offer for sale of up to 7.2 crore equity shares by promoter Equitas Holdings primarily to meet RBI’s listing norms.
JM Financial, Edelweiss Financial Services and IIFL Securities are the lead managers of the IPO and KFintech Private Limited is the registrar to the issue.
Equitas Small Finance Bank is the largest SFB in the country in terms of the number of banking outlets, and the second-largest SFB in terms of Assets under Management (AUM) and total deposits.
It is the third SFB to release an IPO after AU Small Finance Bank and Ujjivan Small Finance Bank.
Equitas Small Finance Bank provides agri-loans, housing loans, micro-lending and vehicle loans, and focuses on serving the financially unserved and underserved segments in the country. It had commenced banking operations in 2016 after getting a license from the Reserve Bank of India (RBI).
Geojit Financial Services in its research note has recommended “SUBSCRIBE” to the offer adding that the Bank is well capitalized with a capital adequacy ratio of 22 per cent (as per June 2020) whereas the minimum requirement is 15 per cent.
“At the upper price band of Rs 33, ESFBL is available at a P/BV of 1.4x based on its book value of Rs 24.1. Based on FY20 P/BV the issue seems fully priced while the outlook for FY21 is slightly weak given the ongoing interest waiver litigation filed in Supreme Court. In spite of short to medium term concerns, we expect these concerns to normalize by FY22E and so recommend Subscribe with a long-term perspective,” the brokerage firm said.
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