The ESAF Small Finance Bank IPO, valued at Rs 463.00 crores, comprises a fresh issue of 6.51 crore shares worth Rs 390.70 crores and an offer for sale of 1.2 crore shares totaling Rs 72.30 crores.
The bidding phase for ESAF Small Finance Bank IPO commenced on November 3, 2023, concluding on November 7, 2023. Final allotment results were determined by November 8, 2023. Subsequently, the shares were officially listed on both the BSE and NSE exchanges on November 10, 2023.
The price band for ESAF Small Finance Bank IPO ranges from ₹57 to ₹60 per share. Retail investors need to invest a minimum of ₹15,000, with a minimum lot size of 250 shares per application. For sNII, the minimum investment is ₹210,000, equivalent to 14 lots (3,500 shares), while for bNII, it is ₹1,005,000, corresponding to 67 lots (16,750 shares).
The matter involves setting aside a maximum of 2,283,653 shares for employees, with an offer price discounted by Rs 5 compared to the issue price. ICICI Securities Limited, Dam Capital Advisors Ltd (formerly known as Idfc Securities Ltd), and Nuvama Wealth Management Limited serve as the book running lead managers for the ESAF Small Finance Bank IPO. Meanwhile, Link Intime India Private Ltd has been appointed as the registrar for the issue.
Objective of IPO.
“Offer For Sale”: - Rs. 72 Cr.
“Fresh Issue”: - Rs. 390.7 Cr.
The Net Proceeds are proposed to be utilized towards augmentation of the Bank's Tier-I capital base to meet the Bank's future capital requirements which are expected to arise out of growth in the Bank's assets, primarily the Bank's loans/advances and investment portfolio and to ensure compliance with regulatory requirements on capital adequacy prescribed by the RBI from time to time.
ESAF Small Finance Bank IPO Details |
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IPO Date | November 03, 2023 to November 07, 2023 | ||||||||||
Listing Date | November 10, 2023 | ||||||||||
Face Value | 10 | ||||||||||
Price | 57-60 | ||||||||||
Lot Size | 250 shares | ||||||||||
Total Issue Size | 463 | ||||||||||
Fresh Issue | 65,116,667 shares (aggregating up to ₹390.70 Cr) | ||||||||||
Offer for Sale | 12,050,000 shares of ₹10 (aggregating up to ₹72.30 Cr) | ||||||||||
Issue Type | Book Built Issue IPO | ||||||||||
Listing At | NSE, BSE | ||||||||||
Share holding pre issue | 449,473,798 | ||||||||||
Share holding post issue | 514,779,858 |
ESAF Small Finance Bank IPO Lot Size |
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Application | Lots | Shares | Amount | ||||||||
Retail (Min) | 1 | 250 | ₹15,000 | ||||||||
Retail (Max) | 13 | 3250 | ₹195,000 | ||||||||
S-HNI (Min) | 14 | 3,500 | ₹210,000 | ||||||||
S-HNI (Max) | 66 | 16,500 | ₹990,000 | ||||||||
B-HNI (Min) | 67 | 16,750 | ₹1,005,000 |
ESAF Small Finance Bank IPO Timeline (Tentative Schedule) |
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IPO Open Date | Friday, November 3, 2023 | ||||||||||
IPO Close Date | Tuesday, November 7, 2023 | ||||||||||
Basis of Allotment | Wednesday, November 8, 2023 | ||||||||||
Initiation of Refunds | Wednesday, November 8, 2023 | ||||||||||
Credit of Shares to Demat | Thursday, November 9, 2023 | ||||||||||
Listing Date | Friday, November 10, 2023 | ||||||||||
Cut-off time for UPI mandate confirmation | 5 PM on November 7, 2023 |
ESAF Small Finance Bank IPO Reservation |
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Investor Category | Shares Offered | Reservation % | |||||||||
Anchor Investor Shares Offered | 22,524,998 (29.11%) | NA | |||||||||
QIB Shares Offered | 15,016,669 (19.41%) | N/A | |||||||||
NII (HNI) Shares Offered | 11,262,500 (14.56%) | ||||||||||
bNII > ₹10L | 7,508,333 (9.70%) | 2,145 | |||||||||
sNII < ₹10L | 3,754,167 (4.85%) | 1,072 | |||||||||
Retail Shares Offered | 26,279,167 (33.97%) | 105,116 | |||||||||
Employee Shares Offered | 2,283,653 (2.95%) | N/A | |||||||||
otal Shares Offered | 77,366,987 (100%) |
ESAF Small Finance Bank IPO Promoter Holding |
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Share Holding Pre Issue | 74% | ||||||||||
Share Holding Post Issue | 59% |
ESAF Small Finance Bank IPO Subscription Status |
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Investor Category | Shares Offered | Shares Bid For | No oF Times Subscribed |
A small finance bank with a focus on unbanked and under-banked customer segments with network of 700 banking outlets (including 59 business correspondent-operated banking outlets), 767 customer service centers (which are operated by our business correspondents), 22 business correspondents, 2,116 banking agents, 525 business facilitators and 559 ATMs spread across 21 states and two union territories, serving 7.15 million customers as at June 30, 2023
Primary products
Advances (asset products): - (a) Micro Loans, which comprises Microfinance Loans and Other Micro Loans; (b) retail loans, which includes gold loans, mortgages, personal loans, and vehicle loans; (c) MSME loans; (d) loans to financial institutions; and (e) agricultural loans.
Deposits (liability products): - Our liability products comprise current accounts, savings accounts, term deposits and recurring deposits.
Services: - safety deposit lockers, foreign currency exchange, giving our customers access to the Bharat Bill Payment System, money transfer services and Aadhaar Seva Kendra services distribution of third-party life and general insurance policies and Government pension products.
The “ESAF” brand was built over 27+ years, beginning in 1995 when ESAF Foundation started its micro loan activities. After acquiring the busine ss of EFHPL, the company has been able to leverage the strength of the “ESAF” brand to grow deposits as a small finance bank on March 10, 2017.
Milestone:
In order to promote financial inclusion, the Indian banking industry has seen several changes in recent years. NBFCs, such as Bandhan and IDFC, received permission to set up universal banks. Also, a few microfinance companies, a local area banks and an NBFC as well as one urban co-operating bank have received permission to set up small finance banks (SFBs). The RBI awarded SFB licences to 12 players keeping in with the government’s focus on financial inclusion and inclusive banking.
The SFB’ AUM is estimated to have clocked 29% CAGR from March 31, 2018 to June 30, 2023. Top 3 SFBs accounted for ~60% of the aggregate AUM as of June 30, 2023, up from 55% as of March 31, 2017 indicating the rising concentration and expansion of players within the SFBs. In Fiscals 2021 and 2022, new loan origination remained low as SFBs turned cautious and selective in disbursals due to the pandemic. However, as economy revived and business operations normalised, SFBs’ AUM witnessed strong growth post pandemic. As of June 30, 2023, SFB AUM is estimated to have crossed ₹1,900 billion. It is expected that SFB’s AUM to grow at ~22-24% CAGR between June 30, 2023 and March 31, 2025, as most of the SFBs have completed the transition phase and are likely to benefit from their operating leverage.
SFBs have a significant growth potential as most of them were functioning as NBFCs/MFIs previously. Immediately after commencement of their operation, all SFBs focused on increasing their deposit base.
Their overall deposit base doubled to around ₹375 billion as of March 31, 2019. Further, the proportion of CASA deposits is estimated to have shot up from nearly ~20% as of March 31, 2020 to ~36% as of June 30, 2023. The increase could be attributed to the higher interest rates they offer and the increase in their branch network. SFBs’ deposit to grow at 40-45% CAGR over June 2023 and March 2025 as players focus on popularizing convenient banking habits to cover the last mile and widen financial inclusion by deepening their penetration in untapped geographies.
Risk Analysis.
Period Ended | 30 Jun 2023 | 31 Mar 2023 | 31 Mar 2022 | 31 Mar 2021 |
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Reserve of Surplus | 1,389.62 | 1,259.66 | 957.32 | 902.59 |
Total Assets | 20,795.94 | 20,223.66 | 17,707.56 | 12,338.65 |
Total Borrowings | 2,739.13 | 3,354.20 | 2,952.83 | 1,694.00 |
Fixed Assets | 187.256 | 187.927 | 159.475 | 138.512 |
Cash | 886.814 | 767.049 | 1511.904 | 1819.126 |
Net Borrowing | 1852.311 | 2587.146 | 1440.929 | -125.126 |
Revenue | 991.78 | 3,141.57 | 2,147.51 | 1,768.42 |
EBITDA | - | - | - | - |
PAT | 129.96 | 302.33 | 54.73 | 105.40 |
EPS | 2.89 | 6.73 | 1.22 | 2.46 |
Key Performance Indicator |
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KPI | Values | ||||||||||
EPS Pre IPO (Rs.) | 6.73 | ||||||||||
EPS Post IPO (Rs.) | - | ||||||||||
P/E Pre IPO | 8.94 | ||||||||||
P/E Post IPO | 5.94 | ||||||||||
ROE | - | ||||||||||
ROCE | - | ||||||||||
P/BV | - | ||||||||||
Debt/Equity | - | ||||||||||
RoNW | 17.69% |
ESAF Small Finance Bank Limited IPO Peer Comparison |
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Company Name | EPS | ROCE | ROE | P/E (x) | P/Bv | Debt/Equity | RoNW (%) | ||||
Suryoday Small Finance Bank Ltd | 18.3 | 9.30% | 5.03% | 8.80 | 1.07 | 5.01 | 9.30% | ||||
CreditAccess Grameen Ltd | 85.3 | 12.1% | 17.8% | 16.7 | 3.87 | 3.05 | 12.1% | ||||
Spandana Sphoorty Financial Ltd | 65 | 5.97% | 0.41% | 12.6 | 1.76 | 2.28 | 5.97% | ||||
Bandhan Bank Ltd | 18.5 | 6.67% | 11.9% | 9.79 | 1.5 | 6.78 | 6.67% | ||||
Ujjivan Small Finance Bank Ltd | 6.45 | 10.6% | 33.3% | 6.97 | 2.22 | 7.08 | 10.6% | ||||
Equitas Small Finance Bank Ltd | 6.98 | 8.04% | 12.2% | 13.5 | 2.01 | 5.50 | 8.04% | ||||
ESAF Small Finance Bank Limited | 6.73 | - | - | 8.94 | - | - | 17.69% |
ESAF Small Finance Bank Limited
Building No. VII/83/8,
ESAF Bhavan, Thrissur-Palakkad National Highway,
Mannuthy, Thrissur 680 651
Phone: +91 487 7123 907
Email: investor.relations@esafbank.com
Website: https://www.esafbank.com/
Link Intime India Pvt. Ltd.
Address: C - 101, 1st Floor, 247 Park L.B.S. Marg, Vikhroli West,
Mumbai 400 083, Maharashtra, India
Phone: +91-22-4918 6270
Email: esaf.ipo@damcapital.in
Website: https://linkintime.co.in/initial_offer/public-issues.html
ESAF Small Finance Bank Ltd. (ESFBL) targets unbanked and under-banked customers, focusing on rural and semi-urban areas. As of June 30, 2023, 62.97% of its advances and 71.71% of its outlets were in these areas. Financially, it showed a mixed performance over the past three years, with a notable increase in FY23. Q1 FY24 saw a net profit of Rs. 129.96 cr. The IPO is priced attractively at a P/BV of 1.47 based on NAV of Rs. 40.92. No dividends were declared. ESFBL, known for its southern presence, offers potential for medium to long-term rewards, appealing to investors.
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