Utkarsh SFB IPO subscribed 102% times on final day; retail quota booked 71 times

The initial public offer (IPO) of Utkarsh Small Finance Bank has received an overwhelming response from investors, especially from qualified institutional buyers (QIBs), with the issue being subscribed nearly 102 times on the final day of bidding. This is the second highest subscription this year after Ideaforge Technologies, which was booked 106 times. The recent IPOs such as Senco Gold and Ideaforge have managed to garner strong response from the market, which reflects a growing appetite for Indian equities amongst the QIBs as well as retailer investors. The secondary market has seen a remarkable rally in the last one month, with BSE Sensex and Nifty50 rising nearly 5% and hitting their respective all-time highs.

As per the BSE data, the issue was subscribed 101.72 times by 4:20 PM as it received bids for over 1,226 crore shares as compared to 12.05 shares on the offer. The quota reserved for QIBs was booked nearly 125 times, while the non-institutional investors (NIIs) category subscribed 81.6 times. The portion for retail investors attracted 71.4 times bid, while the quota reserved for employees was booked 16.35 times, the data showed.

The small finance bank had reserved up to 75% of the issue for QIBs, up to 15% for NIIs, and remaining 10% for retail investors.

The three-day IPO of the Varanasi-based small-scale bank opened for subscription on July 14 and it raised ₹500 crore from its public offering was completely fresh issue of equity shares. The shares will be allotted on July 19, while stocks are slated to list on the BSE and NSE on July 24.

It had set the price band at ₹23-25 per share and lot size was 600 shares and in multiples of 600 shares thereafter. This means, the minimum investment amount for retail investors would be ₹15,000 for one lot and the maximum investment would be ₹1.95 lakh for 13 lots.

The bank intends to use IPO proceeds to augment its Tier-1 capital base to meet its future capital requirements. A part of the capital will also be used towards meeting the expenses in relation to the issue.

Most analysts have recommended investors to subscribe to the Utkarsh SFB IPO over attractive valuations compared to peers, strong growth potential, and promising industry outlook.

Incorporated in 2016, Utkarsh Small Finance Bank (USFB) is a small finance bank with a pan-India presence, having operations across 26 states and union territories in India as of March 31, 2023. The promoter, Utkarsh CoreInvest commenced operations as an NBFC in 2010 and was focused on providing microfinance to unserved and underserved segments and in particular in the states of Uttar Pradesh and Bihar. In October 2015, Utkarsh CoreInvest received the RBI approval to establish an SFB, following which it incorporated Utkarsh Small Finance Bank as a wholly-owned subsidiary on April 30, 2016.

In the last three fiscals, USFB registered continued growth in its total income at ₹1,705.84 crore in FY21, ₹2,033.65 crore in FY22, and ₹2,804.29 crore in FY23. The net profit stood at ₹111.82 crore in FY21, ₹61.46 crore in FY22, and ₹404.50 crore in FY23. On the asset quality front, the net NPAs for the last three years stood at 1.33%, 2.31%, and 0.39%, respectively.

Headquartered in Varanasi, the bank has a strong presence in the rural and semi-urban geographies with a network of 830 branches, 287 ATMs, and 546 micro ATMs. It has Assets under management (AUM) of ₹5,000 crore and was the second fastest-growing SFB in India in the financial year 2019 and FY22. The bank offers loans up to ₹50 crores with a maximum tenure of up to 30 years. 

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