Capital Small Finance Bank’s initial public offering (IPO) opened for subscription today. Capital SFB’s Rs 523-crore IPO comprises a fresh share issue of Rs 450 crore and an offer for sale (OFS) of 15.61 lakh shares. Under the OFS, Oman India Investment Fund, Amicus among others will offload shares.
Capital Small Finance Bank started operations as India’s first small finance bank in 2016. They offer a range of banking products on the asset and liability side. It has 42% of the branches in rural areas, 34% branches in semi-urban areas and 24% in urban areas, as of September 2023.
The bank has a diversified portfolio with sizeable books in multiple asset classes with a secured lending ratio of 99.85% as of September 2023.
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Since FY21, its loans, with a portfolio size of up to Rs 25 lakh, have increased from 62.88% of its total loan book to 67.80% in FY23.
The lender has priced the IPO in the range of Rs 445-468 per share and investors can bid for 32 shares in one lot and in multiples thereafter.
Analysts have given thumbs up to the IPO from a long-term perspective as the company has good credit rating processes, and risk management practices that enable it to maintain good asset quality and low delinquencies.
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“At the above price band, the company is valued at a P/B of 2.01x, with a market cap of Rs 2108 crore after issue of equity shares and a return on net worth of 15.33%. We believe the company’s valuations are fairly priced. and recommend a Subscription-Long rating to the IPO,” said Anand Rathi.
Other details
Approximately 50% of the offer is reserved for qualified institutional buyers, 35% for retail investors and the remaining 15% for non-institutional investors.
In the period ended September 2023, the company’s revenue from operations increased 21% to Rs 415 crore and net profit rose 31% to Rs 54.3 crore.
Nuvama, Equirus Capital and DAM Capital are the book-running lead managers to the issue and Link Intime India is the registrar.
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