The last small finance bank to make its debut on the secondary market was Utkarsh Small Finance Bank in July 2023. By listing at a premium of roughly 52%, it generated spectacular returns for its backers. Another small finance bank IPO, ESAF Small Finance Bank IPO, will hit the D-street on Friday, 3 November 2023 as we enter the penultimate month of this year.

A household name in the banking industry of India is ESAF Small Finance Bank. The bank has become well-known for its commitment to helping the underprivileged gain access to banking services. Explore the financials, strengths, weaknesses, issue size, projected listing date, and other facts of the ESAF Small Finance Bank IPO by reading on.

An Overview of ESAF Small Finance Bank

ESAF Small Finance Bank is a microfinance institution in India that caters to the needs of the country’s rural poor who lack access to traditional banking services. Debit cards, credit cards, mobile banking, microloans, MSME loans, retail loans, financial institution loans, and agricultural loans are all part of the bank’s offerings. South India, particularly the states of Tamil Nadu and Kerela, is where the majority of these services are provided.

As of 30 June 2023, ESAF Small Finance Bank has an extensive branch and ATM network consisting of 700 locations. Additionally, the bank has 767 customer care centers, 22 business correspondents, 2116 banking agents, 525 business facilitators, and 559 automated teller machines. More than 7.15 million Indians in 21 states and 2 union territories can take advantage of the service.

Key Strengths of the Company

ESAF Small Finance Bank identified many positives in its Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI). They are as follows:

• It has a thorough understanding of its target audience, which is India’s unbanked or underbanked populace.
• It has emerged as a key player in the microloan market.
• Banking franchise presence in both rural and semi-urban locations
• The technology-driven business model has boosted expansion and penetration.
• With customer-centric products and a strong support system, it is able to keep the majority of its clients.

Key Risks or Weaknesses Highlighted

ESAF Small Finance Bank has the following risks or vulnerabilities (as mentioned in the DRHP):

• Most of India’s economic activity is located in the southern states of Kerala and Tamil Nadu. The company needs to expand into new areas.
• The Reserve Bank of India (RBI) mandates its compliance. This compromises its capability to operate on its own.
• Non-Performing Asset (NPA) can be a problem. Loss of income owing to unpaid bills from clients.
• Repo rate rises and other policy moves by the RBI carry risks.

Core Financials of the Compan

The financials of a business can be examined for clues as to how successful it will be in the future. Here are the headline numbers for the last three full fiscal years at ESAF Small Finance Bank IPO. Information is as published on the SEBI website in the RHP dated October 28, 2023:

*Amount in Crores

The accompanying table shows that the company has had consistent growth over the past three fiscal years. Income, however, has been highly inconsistent on account of interest rate swings and nonperforming assets. In the coming years, the company will be a major player if it can keep its NPAs under control and expand into new markets.

Details of the IPO

On Friday, November 3, 2023, the public subscription period for shares of ESAF Small Finance Bank will commence, and on Tuesday, November 7, 2023, it will close. There would be a new share issue of Rs. 390.70 cr and a secondary sale of Rs. 72.30 cr in this transaction. Details about the IPO are listed in the table below.

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To conclude

In India, ESAF Small Finance Bank is a household name. But before investing in an IPO, make sure you undertake thorough research and consult a financial expert.

The post ESAF Small Finance Bank IPO: Check Issue Size, Date and Price Band appeared first on Republic Aeon.

Here are the top ten things you should know before signing up for the offer:

1) IPO Dates

The IPO will open for subscription on November 3 and finish on November 7.

2) Price Band

The range of Rs 57-60 per share has been determined as the issue price.

3) Offer Details

ESAF Small Finance Bank public offer consists of a new issue of 6.51 crore shares worth Rs 390.7 crore and a sale of 1.2 crore shares for Rs 72.3 crore. In the OFS, promoter ESAF Financial Holding would sell shares worth Rs 49.26 crore, while investors PNB Metlife India Insurance Company will sell Rs 12.67 crore in shares and Bajaj Allianz Life Insurance Company will sell Rs 10.37 crore in shares. The issue includes a reservation of Rs 12.5 crore in shares for its employees, who would get them at a discount of Rs 5 per share from the final issue price.

4) Objectives of Issue

The net proceeds from the fresh issuance will be put toward developing the bank’s operations, principally through onward lending, and bolstering the bank’s Tier-I capital base to meet future capital requirements.

5) Lot Size

Each investor can place a bid for a minimum of 250 equity shares and in increments of 250 thereafter. Therefore, the lowest possible investment for an individual investor would be Rs 14,250 (250 (Lot size) x 57 (lower price band)). Maximum bids can reach Rs 15,000 in this auction.

6) Company Profile

Customers in rural and semi-urban areas can get loans from ESAF Small Finance Bank. Microloans, retail loans, loans to small and medium-sized businesses, and loans to other banks are all available through this organization. Across 21 states and 2 territories, the bank operates a network of 700 branches (including 59 branches run by business correspondents), 767 customer care centers, and 559 automated teller machines.

7) Financials

The net profit for ESAF Small Finance Bank for the fiscal year that ended in March 2023 increased by 452 percent, reaching Rs 302.33 crore from Rs 54.73 crore the previous year. With deposits up 14.4 percent to Rs 14,665.6 crore and disbursements up 23 percent to Rs 14,690.6 crore, net interest income for the year climbed by 60 percent on-year to Rs 1,836.3 crore. Gross non-performing assets decreased by 451 basis points year over year to 1.65 percent by the end of the June FY24 quarter, while net NPA decreased by 297 basis points year over year to 0.81 percent.

8) Lead Managers

ICICI Securities, Dam Capital Advisors, and Nuvama Wealth Management are acting as book-running lead managers for the issuance, with Link Intime India serving as the registrar.

9) Promoters

ESAF Financial Holdings Private Limited and Kadambelil Paul Thomas are our bank’s promoters.

10) Listing Date

According to the IPO timetable, trading of equity shares in ESAF Small Finance Bank will begin on the bourses on November 16.

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The post ESAF Small Finance Bank IPO: 10 things to know before subscribing to Rs 463 crore issue appeared first on Republic Aeon.