The Small Finance Bank (SFB) license was originally granted to Capital SFB in 2015, making it the first non-NBFC microfinance organization. The business has a branch-based operating strategy and has a strong presence in rural and semi-urban areas. It began with 47 locations and has since grown to over 172 locations in the Union Territory of Chandigarh, Delhi, Haryana, Rajasthan, and Himachal Pradesh.
MAZOR DETAILS
Details of the IPO: February 07, 2024 is the opening date.
Date of IPO Closing: February 09, 2024
Minimum Order Value32 portions
IPO Price: between Rs 445 and Rs 468 per equity share
Face Value: Rs 10 per equity share
Type of Issue: Book-Built Issue IPO
The first public offering (IPO) of Capital Small Finance Bank would be for equity shares valued at Rs 10 apiece. A total of Rs 523.07 crore would be issued at the top price band, with the IPO price range set between Rs 445 and Rs 468 per equity share.
MAZOR RISKS
i.) The bank's operations in rural and semi-urban areas currently account for a large portion of its business, and any negative developments in the banking and finance sector in these areas could have a negative impact on the bank's operations, cash flows, financial condition, and business results.
ii.) The majority of the bank's operations are in North India; as of September 30, 2023, there were about 149 of the bank's total of 173 branches in the state of Punjab. Any negative shift in North India's economy could have a negative impact on the lender's cash flow and financial situation.
iii.) The bank is embroiled in legal actions, the results of which could have a negative impact on its cash flows, business, and reputation.
Listing The total number of FV Rs 10* shares issued at BSE and NSE is 11,176,713, with an aggregate value of Rs 523.07 Cr. The fresh issue of FV Rs 10* shares is 9,615,384, with an aggregate value of Rs 450 Cr.* 1,561,329 shares of FV at a price of Rs 10* are up for sale (totaling Rs 73.07 Cr).* 50% of the offer's retail shares were offered as QIB shares. Presented with a 35% Offer
NII (HNI) Shares: 15% of the Offer *At the Highest Price Range
The initial public offering (IPO) is slated to start on February 07, 2024, and end on February 09, 2024. There is a 32-share market lot available for the IPO, and applicants may choose to apply for multiples of this lot. Retail investors may apply individually for up to 13 lots, which is equal to 416 shares or a total investment of Rs 1,94,688 if the upper price band is met.
Valuation and outlook
Company Name P/E P/B RoE (%) RoA (%)
Capital Small Finance Bank Ltd 15 2 16 1
Listed Peers
IDFC First Bank 19 2 11 1
AU Small Finance Bank 26 3 16 2
Equitas Small Finance Bank 15 2 12 2
Ujjivan Small Finance Bank 18 2 34 4
Suryoday Small Finance Bank 11 1 5 1
ESAF Small Finance Bank 12 1 19 2
Financials
Rs (in crore) FY21 FY22 FY23 H1FY24
Interest Earned 511 578 676 386
Other Income 46 54 49 29
Total Income 557 632 725 415
Net Profit 41 63 94 54
Overview of the company
After receiving permission from the Reserve Bank of India (RBI), Capital Small Finance Bank opened for business in 2016, becoming the country's first small finance bank. Within the states of Punjab, Haryana, Delhi, Rajasthan, Himachal Pradesh, and the Union Territory of Chandigarh, it offers a wide range of banking products on the asset and liability sides.
The majority of the bank's asset products include loans for agriculture, micro, small, and medium-sized businesses (MSMEs), trading loans including working capital and machinery loans, and mortgage choices such housing loans and loans secured by real estate. The bank's basic strategy is to strengthen its retail-focused banking franchise in the states where it conducts business by making credit more affordable.
It focuses on a narrow market niche, targeting the middle-class consumer sector and giving particular attention to rural and semi-urban areas. As of September 30, 2023, the bank has 173 branches and 175 ATMs under operation. More than 75% of its branches are located in rural and semi-urban areas, which include 24 districts, and these areas account for 75% of the bank's entire client base.
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