Utkarsh Small Finance Bank is gearing up for its initial public offering (IPO) scheduled to open on July 12. The IPO will span three days and aims to have the bank's shares listed on both stock exchanges. Utkarsh Small Finance Bank primarily focuses on serving rural and semi-urban areas, offering a range of deposit products and loan facilities. With the second-highest provision coverage ratio among Small Finance Banks (SFBs), the bank has garnered attention from investors. The IPO consists of fresh equity issues of up to Rs 500 crore, with a price band set at Rs 23-25 per share. Here are some key details about the Utkarsh Small Finance Bank IPO:
Business Overview: Utkarsh Small Finance Bank, established in 2016 and commencing operations in 2017, provides a range of deposit products, including savings accounts, salary accounts, current accounts, recurring and fixed deposits, and locker facilities. It primarily operates in rural and semi-urban areas, catering to approximately 3.59 million customers as of March 2023.
Industry Outlook: Small Finance Banks (SFBs) differ from Non-Banking Financial Companies (NBFCs) as they have the flexibility to offer various loan and deposit products. SFBs are expected to witness a Compound Annual Growth Rate (CAGR) of around 22% in their loan portfolios between fiscal years 2023 and 2025.
IPO Details: The Utkarsh Small Finance Bank IPO includes a fresh equity issue of up to Rs 500 crore. The price band for the IPO has been set at Rs 23-25 per share. Investors have the option to place bids for a minimum of 600 shares, and they can increase their bid in multiples of that amount.
Structure: Qualified Institutional Buyers (QIBs) are allocated 75% of the shares, while Non-Institutional Investors (NIIs) have 15% allocation. The remaining 10% is reserved for Retail Investors.
Financial Performance: Utkarsh Small Finance Bank reported a total income of Rs 2,804 crore and a net profit of Rs 404 crore for the financial year ending March 2023.
IPO Objectives: The proceeds generated from the IPO will be utilized to bolster the bank's Tier 1 capital, which is vital for meeting its future financial needs and obligations.
Market Outlook: Market analysts estimate the current Grey Market Premium (GMP) for Utkarsh Small Finance Bank to be around Rs 14 per share in the unlisted market.
Loan Portfolio Growth: Utkarsh Small Finance Bank has exhibited strong growth in its gross loan portfolio, ranking as the third fastest-growing bank among small finance banks between fiscal years 2019 and 2023.
Book Running Lead Managers: ICICI Securities & Kotak Mahindra Capital Company have been appointed as the book running lead managers for Utkarsh Small Finance Bank IPO.
It is suggested to conduct thorough research and seek expert advice before making investment decisions. The Utkarsh Small Finance Bank IPO presents an opportunity for potential investors to participate in the banking sector's growth and expansion into rural and semi-urban areas.