Retail and NII flock Utkarsh Small Finance Bank IPO, Issue subscribed 4.73 times on Day 1

Varanasi-based Utkarsh Small Finance Bank Ltd recorded the third fastest Gross Loan Portfolio growth between Fiscal 2019 and Fiscal 2023 among SFBs with AUM of more than Rs 6,000 crore has received bids of 57,07,21,800 shares against the offered 12,05,43,477 equity shares, at a price band of ₹23-25, according to the data available on the stock exchanges.

All investor categories showed a lot interest in the offer, and as a result, the issue was fully subscribed within two hours of bidding, resulting in an overall subscription to 4.73 times on the first day of bidding.

Retail Portion was the most subscribed with a subscription of 13.75 times, followed by Non-Institutional Investors Portion was subscribed 8.25 times. Employee Portion with a subscription of 2.73 times, whereas, Qualified Institutional Buyer Portion was subscribed 0.04 times. The issue kicked off for subscription on Wednesday, July 12, 2023 and will close on Friday, July 14, 2023.

A day prior to the Issue opening, Utkarsh Small Finance Bank Ltd had raised Rs 223 crore from anchor investors. Foreign Investors and Domestic Institutions who participated in the anchor were SBI Mutual Fund, ICICI Prudential Banking and Financial Services, Kotak Mutual Fund, Aditya Birla Sun Life Mutual Fund, Mirae Asset Mutual Fund, Goldman Sachs, Massachusetts Institute of Technology, ICICI Prudential Life Insurance, SBI Life Insurance, and Edelweiss Mutual Fund.

Broking houses like Nirmal Bang, Anand Rathi, SBI Securities, Geojit Financial Services, LKP Securities, Reliance Securities, Hensex Securities, Swastika Investmart, Ashika Research, BP Equities (StoxBox) and Marwadi Financial Services have given a "SUBSCRIBE" rating to the issue.

The said brokerages unanimously recommend subscribing to the IPO due to its favorable valuation, stable growth, improved asset quality, cost efficiency, diversified product offerings, increasing financial performance, and positive industry outlook.

Firstly, Utkarsh SFB is considered fairly priced compared to its peers and has a stable growth trajectory. It has a diversified distribution network and significant cross-selling opportunities. Additionally, the bank has reduced its exposure to the unsecured micro-banking segment, which has de-risked its business model. Utkarsh SFB has also outperformed its peers in terms of loan growth, return ratios, and asset quality. Furthermore, it is available at a reasonable valuation, considering the positive industry outlook and the bank's resilient performance. The brokerages believe that Utkarsh SFB is well-positioned to benefit from the growth of the Small Finance Bank sector and offers a good investment opportunity for both short to medium-term gains and long-term investment.

ICICI Securities Limited and Kotak Mahindra Capital Company Limited are the book running lead managers, while KFin Technologies Limited is the Registrar to the Issue.

Source : Equity Bulls

Keywords

UtkarshSmallFinanceBank IPO FundRaising OverSubscription Retail NII