IPO listed on 24 Jul'23
Utkarsh Small Finance Bank Ltd
Minimum Investment
₹ 15,000 / 600 shares
Grey market premium
₹ 17 (68% premium)
Issue price
₹ 25
Listing price
₹ 40
Listing day %
92%
Listing on
July 21, 2023
Subscribe for listing gains
- From a valuation standpoint, the IPO appears to be reasonably priced at a PE multiple of 6.8x, which is lower than the industry average. Additionally, the grey market premium (GMP) for the issue indicates a premium listing, making it appealing for investors seeking listing gains.
- The strong deposit growth, a 31% uptick in loan book, steady secured loans growth, and declining trend in non-performing assets position the IPO as a potentially attractive short-term investment opportunity.
- However, Utkarsh SFB lags in some aspects, as highlighted in the 'Risk Factors' section below. Therefore, investors eyeing long-term capital growth should assess the company's performance over the next two quarters before making any investment commitments.
About the company
Founded in
30 Apr'16
Managing director
Govind Singh
- Promoted by Utkarsh CoreInvest Ltd, Utkarsh SFB offers a wide array of products including micro-banking loans, retail and wholesale lending, housing, commercial vehicle/equipment, and gold loans, introduced in FY2022.
- Its liability offerings include savings and current accounts, varied term and recurring deposits, and non-credit services such as ATM-debit cards, bill payment systems, and distribution of third-party POS terminals, mutual funds, and insurance products.
- It recorded the third fastest Gross Loan Portfolio (GLP) growth among Small Finance Banks (SFBs) over Rs 6,000 crore from FY2019-2023.
STRENGTHS
- Healthy track record: From FY21 to FY23, the bank's GLP grew annually by 28.8% to Rs 13,957.1 crore, deposits surged 35.1% to Rs 13,710.1 crore, and net interest income (NII) improved annually by 35% to Rs 1,529 crore. In addition, the net interest margin (NIM) improved to 9.6% from 8.2%.
- Rise in deposits: Total deposits grew from Rs 7,507.6 crore in March 2021 to Rs 13,710.1 crore in March 2023, while the number of deposit-only customers increased from 0.38 million to 0.86 million.
- Increasing clientele: The number of total customers (deposit and credit) rose from 2.9 million in March 2021 to 3.59 million in March 2023.
- Strong distribution network: As of March 2023, the bank had 830 outlets across 26 States and Union Territories, spanning 253 districts, including 522 outlets in rural and semi-urban regions.
- Robust liquidity: As of March 2023, their Liquidity Coverage Ratio stood at 375.82%, exceeding the regulatory requirement of 90%, indicating a strong liquidity buffer.
RISK FACTORS
- Fluctuation in net profit: Despite steady top-line growth, the bank experienced a severe setback in bottom-line in FY22 due to increased provisioning for delinquencies. Net profit dropped from Rs 111.8 crore in FY21 to Rs 61.5 crore in FY22, before rebounding to Rs 404.5 crore in FY23.
- Concentration risk: A significant portion of Utkarsh SFB’s lending is concentrated in Bihar and Uttar Pradesh. These states have shown poor asset quality in downturns, which puts the bank at higher risk in such circumstances.
- Regulatory concerns: SEBI issued a show cause notice to the bank for alleged violations of the Companies Act 2013 and SEBI regulations related to public security offerings, which may result in penal actions.
- Unsecured advances: Much of the bank's lending, including microbanking loans, lack collateral, which may impact financials if recovery is delayed or impossible.
- Operating cash flow issues: Past negative cash flow from operations poses profitability and growth risks if not converted into positive cash flow.
Issue details
Issue type
Mainstream
Issue size
₹ 500 crore
Fresh Issue
₹ 500 crore
OFS
₹ -
Price range
₹ 23 - 25
Lot size
600 shares
Issue Objective
Net proceeds of the issue will be utilised towards augmenting its Tier - 1 capital base to meet its future capital requirements.
Dates
Bidding open
12 Jul'23
Bidding close
14 Jul'23
Allotment date
19 Jul'23
Refund date
20 Jul'23
Listing
24 Jul'23
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
<15%
Retail individual investors
<10%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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