Utkarsh Small Finance Bank IPO is set to launch on July 12, 2023. The bank has experienced substantial growth in loans given out between 2019 and 2023, making it the third fastest-growing bank compared to its peers. The IPO price band for Utkarsh Small Finance Bank is set at Rs 23 to Rs 25 per share, which is considered relatively low.
About Utkarsh Small Finance Bank
Utkarsh Small Finance Bank started as a microfinance-focused non-banking financial company in 2010, catering to underserved areas in Uttar Pradesh and Bihar. It expanded its operations to become a small finance bank in 2016. As of March 2023, the bank operates across 26 states and union territories, with a strong presence in rural and semi-urban areas. It offers a range of financial products and services tailored to different customer segments, including loans, savings accounts, and other banking services.
Utkarsh Small Finance Bank IPO Details
| IPO Opening Date | 12-Jul-23 |
| IPO Closing Date | 14-Jul-23 |
| IPO Listing Date | 24-Jul-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 10 per equity share |
| IPO Price band | Rs 23 to Rs 25 per equity share |
| Lot Size | 600 Shares |
| Min Order Quantity | 600 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 500 Crores |
| QIB shares offered | Not less than 75% of the offer |
| NII/HNI shares offered | Not more than 15% of the offer |
| Retail shares offered | Not more than 10% of the offer |
Utkarsh Small Finance Bank Limited Financials
In terms of financial performance, Utkarsh Small Finance Bank has shown steady growth in total assets and revenue. Profit after tax experienced a temporary decline but recovered and achieved higher profitability in the last fiscal year.
| Period Ended | Total Assets | Total Revenue | Profit After Tax | Net Worth | Reserves and Surplus | Total Borrowing |
|---|---|---|---|---|---|---|
| 31-Mar-20 | 9,404.32 | 1,406.18 | 186.74 | 1,019.50 | 260.23 | 2,675.04 |
| 31-Mar-21 | 12,137.91 | 1,705.84 | 111.82 | 1,368.35 | 520.02 | 2,607.83 |
| 31-Mar-22 | 15,063.77 | 2,033.65 | 61.46 | 1,572.30 | 676.78 | 2,571.94 |
| 31-Mar-23 | 19,117.54 | 2,804.29 | 404.50 | 2,000.32 | 1,104.42 | 2,349.48 |
Objective of the Utkarsh Small Finance Bank IPO?
The IPO’s objective is to augment the bank’s Tier-1 capital base to meet future capital requirements. The net proceeds from the IPO will also be utilized for meeting expenses. After listing, the promoter holding in the bank will reduce from 84.75% to 69.28%.
Utkarsh Small Finance Bank’s IPO Price Valuation
In terms of valuation, the IPO price band indicates a price-to-earnings (P/E) ratio of approximately 6x to 9x based on the company’s earnings per share (EPS). Compared to its peers, the IPO is reasonably priced. The grey market premium for the IPO is reported to be between Rs 4 to Rs 5 per share.
Utkarsh Small Finance Bank IPO Lot Size
The Utkarsh Small Finance Bank IPO lot size is 600 shares.
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 600 | ₹15,000 |
| Retail (Max) | 13 | 7800 | ₹195,000 |
| S-HNI (Min) | 14 | 8,400 | ₹210,000 |
| S-HNI (Max) | 66 | 39,600 | ₹990,000 |
| B-HNI (Min) | 67 | 40,200 | ₹1,005,000 |
Positive Factors to invest in Utkarsh Small Finance Bank IPO
Positive factors for investing in Utkarsh Small Finance Bank IPO include its strong understanding of the microfinance segment, presence in rural and semi-urban areas, and diversification of its product portfolio. The bank has a robust growth in deposits, a well-established distribution network, and has shown strong revenue growth over the years.
Risk or Negative Factors in Utkarsh Small Finance Bank IPO
However, there are also some risk factors to consider. The bank’s margins have declined in the past but have shown improvement. The bank is subject to regulatory inspections and non-compliance could impact its business. A significant portion of the bank’s advances is concentrated in Bihar and Uttar Pradesh, which poses potential risks. The bank also faces risks related to customer loss, bulk deposits, and certain regulatory actions.
What are Utkarsh Small Finance Bank IPO Dates?
| IPO Opens on | Wednesday, 12 July 2023 |
| IPO Closes on | Friday, 14 July 2023 |
| Basis of Allotment | Wednesday, 19 July 2023 |
| Initiation of Refunds | Thursday, 20 July 2023 |
| Credit of Shares to Demat | Friday, 21 July 2023 |
| Listing Date | Monday, 24 July 2023 |
| Cut-off time for UPI mandate confirmation | 5 PM on Jul 14, 2023 |
Utkarsh Small Finance Bank IPO Review – Conclusion
In conclusion, the Utkarsh Small Finance Bank IPO presents both positive and negative factors for investors to consider. It is suitable for high-risk investors who understand the associated risks and have a medium to long-term investment perspective
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