Utkarsh small finance bank IPO – Market regulator SEBI approved Utkarsh small finance bank DRHP in October 2022. The bank refiled DRHP with a lower issue size. Utkarsh Small finance bank, is coming up with an initial public offering (IPO) consisting of a fresh issue of INR 500 crores. There is no offer for sale (OFS) in the fresh DRHP document submitted on July 29, 2022. The face value of each equity share will be INR 10 per equity share.
Utkarsh small finance bank IPO Key Facts
- Utkarsh small finance bank IPO Key Details
- The IPO opens on July 12, 2023.
- The issue price is fixed at Rs 23-25 per share.
- The size of the IPO is Rs 500 crore.
- The IPO is entirely a fresh issue of shares.
- The IPO is open for subscription to qualified institutional buyers, non-institutional investors, and retail investors.
- The IPO closes on July 14, 2023.
- The minimum bid size for the IPO is 600 shares.
- The shares are expected to be listed on the BSE and NSE on July 24, 2023.
Utilization of Net Proceeds from Utkarsh small finance bank IPO
Utkarsh small finance bank will not receive any amount from the offer for sale. As per the RBI License and the SFB Licensing Guidelines, the Bank is required to list its Equity Shares on the Stock Exchanges within three years of reaching a net worth of INR 5,000 million.
- The bank will utilize the Net Proceeds from the Fresh Issue towards augmenting its Tier – 1 capital base to meet its future capital requirements.
- Additionally, the Bank will also get the benefits of listing Equity Shares on the Stock Exchanges.
Utkarsh small finance bank IPO Good or Bad
The company was incorporated as ‘Utkarsh Small Finance Bank Limited’ in Varanasi, Uttar Pradesh on April 30, 2016. The Bank commenced its business operations on January 23, 2017. The promoter Utkarsh CoreInvest Limited commenced its operations as an NBFC in Fiscal 2010.
- Utkarsh small finance bank is engaged in banking services such as MSME loans, housing loans, accounts deposits, insurance, and investment.
- The bank operates across India and is present in 22 states and union territories.
- Utkarsh small finance bank has 686 bank outlets as of March 2022.
- Microfinance business consists of over 75% of the total bank loan book.
- The borrowers of the bank are mainly engaged in self-employed activities.
- Second fastest AUM growth between Fiscal 2019 and Fiscal 2022 with AUM over INR 50 billion in FY22.
- The bank is focusing on rural and semi-urban areas.
- As of March 31, 2022, the bank has 3.14 million customers primarily in the states of Bihar, Uttar Pradesh, and Jharkhand.
Utkarsh small finance bank IPO Company Promoters
Utkarsh is led by a highly experienced senior management team. The Promoters and shareholders of the Company are:
- Govind Singh – has over 25 years of experience in the banking and financial services sector.
- Utkarsh CoreInvest Limited
The bank is also backed by institutional investors including British International Investment plc, RBL Bank Limited, International Finance Corporation, NMI Frontier Fund KS, Lok Capital Growth Fund, SIDBI, Housing Development Finance Corporation Limited, HDFC Life Insurance Company Limited, HDFC Ergo General Insurance Company Limited, ICICI Prudential Life Insurance Limited, Faering Capital India Evolving Fund, Hero Enterprises Partner Ventures, responsAbility Participations Mauritius, Shriram Life Insurance Company Limited, and Aavishkaar Bharat Fund.
Utkarsh small finance bank IPO – financial snapshot
- Utkarsh Small Finance Bank has been a consistent performer in terms of financial returns over the years.
- Interest Earned Other consistently grew from FY20 to FY22.
- Net cash flow from operation looks strong except for the year FY21 due to the Covid luck impact.
- Gross Loan Portfolio and Disbursements went up during this period.
- However, Net profit has declined from INR 1,867.43 million in FY20 to INR 614.62 million in FY22.
- EPS has also been going down during this time from 2.49 in FY20 to 0.7 in FY22.
- Return on Average Assets and Return on Average Equity declined during the period.
Utkarsh small finance bank IPO – Valuation Parameters
| All amounts in INR Million (Year ended March 31) | 2020 | 2021 | 2022 |
|---|---|---|---|
| Total Income | 14,061.80 | 17,058.36 | 20,336.46 |
| Gross Loan Portfolio | 66,609.45 | 84,156.60 | 106,307.25 |
| Disbursements | 65,592.47 | 59,140.08 | 90,462.79 |
| Net Interest Income | 7,282.24 | 8,392.46 | 10,608.51 |
| Net Interest Margin | 10.13% | 8.20% | 8.75% |
| Net profit for the year | 1,867.43 | 1,118.15 | 614.62 |
| Return on Average Assets | 2.51% | 1.05% | 0.48% |
| Return on Average Equity | 20.32% | 9.99% | 4.14% |
| Gross NPA as a percentage of Gross Advances (%) | 0.71% | 3.75% | 6.10% |
| Net NPA as a percentage of Net Advances (%) | 0.18% | 1.33% | 2.31% |
| Earnings Per equity Share-Diluted | 0.70 | 1.46 | 2.49 |
| Net Cash from Operating Activities | 1,152.07 | (834.63) | 13,291.56 |
| Cost to Income Ratio | 57.64% | 56.54% | 59.11% |
Is it safe to invest in Utkarsh small finance bank IPO?
- Utkarsh small finance bank is a well-diversified company in terms of its geographic market.
- However, the financial performance of the bank does not look convincing to me.
- Net profit, Return on Average Assets, and Return on Average Equity have gone down over the last three years.
- NPA of the bank has gone up during FY21-22 due to Covid 2nd wave.
- Gross NPA increased from 3.75% in FY21 to 6.1% in FY22.
- Net NPA also increased from 1.33% to 2.31% during the same period.
- The cost to Income Ratio has also gone up during the same time.
- There are many listed banks and NBFCs available with strong brands and lower valuation that are operating in the same field.
- I would invest in the IPO for a listing gain but not for long-term investment.
- Also, I would feel better investing in its peers like – Five-Star Business Finance, IBFC first bank etc.
Utkarsh Small Finance Bank IPO Details
| Utkarsh Small Finance Bank IPO Details | Details |
|---|---|
| Utkarsh small finance bank IPO launch date | Jul 12, 2023 to Jul 14, 2023 |
| Utkarsh small finance bank IPO Price band | ₹23 to ₹25 per share |
| IPO Allotment date | Wednesday, 19 July 2023 |
| Refunds Initiation date | Thursday, 20 July 2023 |
| Credit of Shares to Demat Account | Friday, 21 July 2023 |
| Utkarsh Small Finance Bank IPO Listing Date | Monday, 24 July 2023 |
| Fresh Issue | ₹ 500 Crore |
| Offer for Sale | Nil |
| Equity Shares outstanding prior to the Offer | 895,521,522 Equity Shares |
| Minimum bid (lot size) | 600 Shares |
| Minimum Investment (Retail Investor) | ₹15,000 |
| Maximum bid (lot size) | 7800 shares |
| Maximum Investment (Retail Investor) | ₹195,000 |
| Face Value | ₹10 per share |
| Listing on | BSE & NSE |
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Utkarsh small finance bank IPO Details – Contact and lead managers
| Contact Details | Lead Managers |
| Utkarsh Tower, NH – 31 (Airport Road), Sehmalpur, Kazi Sarai, Harhua, Varanasi 221 105, Uttar Pradesh, India. Telephone: +91 542 660 5555 Email: shareholders@utkarsh.bank https://www.utkarsh.bank/ | 1. ICICI Securities Limited 2. KOTAK MAHINDRA CAPITAL COMPANY LIMITED |
Utkarsh small finance bank IPO Subscription Status
Utkarsh IPO allotment will be available on IPO allotment will be available on KFin Technologies website. To know your allotment status, get ready with your PAN number and click on this link.
Utkarsh small finance bank IPO GMP
| Date | Utkarsh small finance bank IPO GMP | IPO Price |
| 10-07-2023 | ₹14 (May list at ₹39) | ₹25 |