The initial public offering (IPO) of Suryoday Small Finance Bank (SFB) opened for subscription earlier in the day and will be available for subscription till Friday, March 19, 2021. The IPO has a price band of Rs 303-305 per share.
Ahead of its Rs 582 crore IPO, Suryoday SFB raised a little over Rs 170 crore (Rs 1,70,12,65,500) from 13 anchor investors, data from the stock exchanges showed.
The anchor investors include the likes of ICICI Prudential Life Insurance Company, SBI Life Insurance Company and Goldman Sachs (Singapore).
The IPO comprises fresh issuance of 81,50,000 equity shares and an offer for sale (OFS) of up to 1,09,43,070 equity scrips by existing shareholders. The proceeds of the issue will be utilised towards augmenting the capital base to meet future capital requirements.
The OFS route includes sale by International Financial Corporation (IFC), Gaja Capital, HDFC Holdings, IDFC First Bank, Kotak Mahindra Life Insurance Company, DWM (International) Mauritius Ltd and Americorp Ventures.
Investors who wish to subscribe to Suryoday Small Finance Bank IPO can bid in the lot of 49 equity shares and multiples thereof. At the upper price band, they will have to shell out Rs 14,945 to get a single lot of Suryoday SFB. The shares will be listed on both BSE and National Stock Exchange (NSE).
The SFB has over 20 institutional investors with a mix of institutional investors, development funds, and private equity investors.
As of March 2020, the net worth of the SFB stood at around Rs 1,000 crore with a capital adequacy ratio of 30 per cent. It has a deposit base of more than Rs 2,800 crore and a gross loan portfolio of around Rs 3,700 crore.
Axis Capital, ICICI Securities, IIFL Securities and SBI Capital Markets are the book running lead managers to the IPO while Kfin Technologies is the registrar of the issue.
The research teams at Anand Rathi Share and Stock Brokers and LKP Securities in their respective notes have recommended “Subscribe” to the offer.
Anand Rathi Research in its IPO note said, “At the upper end of the IPO price band, it is offered at 2.7x P/Bv and 5.8x 9MFY21 EPS, with a market cap of Rs. 3,237 crores. On comparative basis, the company is placed at a little bit higher valuation as compared to its peers. However it is expected that the company is going to get benefited from the overall growth in demand of commercial vehicle loans and affordable housing finance which results in improvement in overall return ratios.”
It further noted that, “Additionally, we also expect operating parameter to improve further at a healthy rate owing to improvement in NIM, asset quality. Hence considering the differentiated business model and with the current financials, we recommend a “Subscribe (Long Term)” rating to this IPO.”
LKP Research in its IPO note stated, “At higher price band (₹305), the stock is valued at 2.28(x) P/BVPS with current book value per share of ₹133.5. Factoring the good return ratios, FY20 ROA/ROE of 11.3%/2.5%, we believe that Suryoday Small Finance Bank Limited is worth subscribing. Thus we recommend SUBSCRIBE.”