The IPO of Utkarsh SFB has been subscribed 9.83 times so far on the second day, the retail portion has been booked over 26 times

Utkarsh Small Finance Bank (SFB) initial public offering (IPO) valued at 500 crore rupees continued to see strong investor demand for the second day of the tender. The issue, which sailed through within just two hours of bidding, garnered 4.73 subscriptions on the first bidding day.

Utkarsh Small Finance Bank is selling its shares in the three-day bidding process ending Friday 14 July in the range of Rs 23-25 ​​apiece offering at least 600 shares and multiples thereafter.

According to data from the BSE, as of 12:45 p.m. on Thursday, July 12, investors placed bids for 1,18,53,54,600 shares, up 9.83 times compared to the 12,05,43,477 shares offered for subscription . 2023

The retail investor quota was booked 26.29x, while the non-institutional bidders (NIIs) allotment generated 15.85x bids. The employee share was 6.53 percent subscribed, while the qualified institutional bidder share was 1.45 percent subscribed

Founded in 2016, Utkarsh Small Finance Bank is a small financial bank in India that recorded the second fastest AUM growth in FY2018-19 and FY2021-2022. The private lender has assets under management (AUM) of more than 6,000 crore. Headquartered in Varanasi, Utkarsh Small Finance Bank operates in 26 states and union territories with 830 bank branches and 15,424 employees (as of March 31, 2023). It has a customer base of 3.59 million mostly located in rural and semi-urban areas, primarily in Bihar and Uttar Pradesh. The majority of brokerage firms are positive about the issue and are proposing a long-term subscription, citing attractive pricing, strong balance sheets and solid business fundamentals. However, one select analyst has identified geographic concentration as the biggest threat to his business.

The company has demonstrated exceptional performance in FY23 and stands strong compared to its peers with the highest Cash Coverage Ratio and second lowest Net NPA in FY23. Going forward, the company plans to expand its operations in the country’s newer western and southern regions, said Arihant Capital Markets, which has a Subscribe for Long Term rating.

In underserved and densely populated states like UP and Bihar, there is tremendous demand for micro business loans. It is available with a P/BVPS of 1.12, which is lower compared to competitors; However, future net interest margin development will be hampered as it may come under pressure from rising funding costs, Canara Bank Securities said, adding “Subscribe”. A day before the IPO, Utkarsh SFB allotted 8.91 crore shares to 20 anchor investors at an issue price of Rs. 25 per share, raising Rs. 222.75 crore. SBI Mutual Fund, ICICI Prudential, Kotak Mahindra Trustee, Aditya Birla Sun Life Trustee, Goldman Sachs, SBI Life Insurance, Edelweiss Trusteeship, Founders Collective Fund and AG Dynamics Funds contributed to the anchor book.

“In the higher price range, the Utkarsh SFB issue is calculated at a P/E of 1.1 to its post-issuance adjusted book value, which is available at a discount to its peers’ average P/E of 1.8. Given the strong growth prospects and the expectation of a stable credit rating given the cost development, we assign a rating of Subscribe to the issue,” said Choice Broking.

ICICI Securities and Kotak Mahindra Capital Company are the underwriters of the offering, while Kfin Technologies has been appointed registrar of the offering. The lender’s shares will be listed on both the BSE and the NSE with 24th July (Monday) as the provisional listing date. (Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. They do not represent the views of Shop Today)

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