Utkarsh Small Finance Bank Lists on NSE, BSE: After an overwhelming response to the IPO, shares of Utkarsh Small Finance Bank listed at a robust premium of 60 per cent over the issue price. The stock was listed at Rs 40 on NSE while it debuted at Rs 39.95 on BSE as against the IPO price of Rs 25.
The initial public offering of the small finance bank recorded the second highest subscription numbers after Ideaforge Technology in current calendar year, subscribing 101.91 times during July 12-14.
Qualified institutional buyers were at the forefront with buying shares 124.85 times the allotted quota, followed by high networth individuals and retail investors who had bid 81.64 times and 72.11 times the part set aside for them. Employees, too, were aggressive in bidding, who part was booked 16.58 times.
While the bank’s topline remained healthy at a CAGR (compound annual growth rate) of 26 percent over FY21-23, the bottomline growth in FY22 was muted following the general market trends after the pandemic. Its net NPAs came in at 1.33 percent, 2.31 percent, and 0.39 percent for FY21, FY22, and FY23, respectively.
Utkarsh SFB recorded the third-fastest gross loan portfolio growth between fiscal 2019 and fiscal 2023 among peers, with a gross loan portfolio of over Rs 6,000 crore.
For the year ended March 2023, the bank recorded a total income of Rs 2,804 crore, while net profit for the same period came in at Rs 404 crore.
The net proceeds from the fresh issue will be utilised to augment the lender’s Tier-1 capital base to meet future capital requirements.
Ahead of the listing, the shares of Varanasi-based Utkarsh SFB commanded a grey market premium (GMP) of Rs 16.10 in the unlisted market. The current grey market signal suggested a listing of 64 percent for the investors receiving the allotment.
The grey market is an unofficial market wherein the shares can be bought and sold till the listing on the BSE and NSE.
ICICI Securities and Kotak Mahindra Capital Company acted as the book-running lead managers to the issue, while Kfintech is the registrar.
What Should Investors Do Now?
Anubhuti Mishra, Equity Research Analyst at Swastika Investmart Ltd., said: “The Utkarsh Small Finance Bank IPO made a strong debut on the stock exchanges today, listing at ₹40 per share, a premium of 60% over the upper end of the price band of ₹25. The strong listing was in line with expectations. The company has a strong track record of growth, and its financial performance has been improving in recent years. 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.”
“With optimistic market sentiments if allotted investors gets any healthy listing gains over and above our expectation, we recommend them to book profits on the listing day while risk takers can continue to hold for long term as we also see an abundance of growth opportunities in microfinance in the area where Utkarsh enjoys the market share,” said Prashanth Tapse, Research Analyst – Sr VP Research at Mehta Equities.
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