Stellar listing: Ujjivan Small Finance Bank shares debut at 58% premium to IPO price

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Published: December 12, 2019 10:14:12 AM

Ujjivan Small Finance Bank shares made a stellar debut on Thursday morning following a blockbuster IPO.

economy, gdpAt a time when the economy is slowing, it is only to be expected that tax collections, too, will slow.

Ujjivan Small Finance Bank shares made a stellar debut on Thursday morning following a blockbuster IPO. Ujjivan Small Finance Bank shares soared to Rs 60.20 on BSE, implying a premium of 70% to issue price of Rs 37. The stock listed at Rs 58 on BSE, implying a premium of more than 56% to issue price. Earlier,  the firm saw a blockbuster IPO as the issue was subscribed as many as 170 times, making it one of the most subscribed IPOs in the last few years in India’s primary market.

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The portion reserved for institutional investors was subscribed 113.8 times, while that reserved for high net-worth individuals and retail investors was subscribed 486.14 and 49.5 times, respectively. Shareholders of the bank’s parent company— Ujjivan Financial Services Ltd— subscribed to shares worth 3.27 times the portion reserved for them. The proceeds from the issue will be utilised increasing Tier-1 capital base to meet future capital requirements and towards meeting the expenses in relation to the issue. Ujjivan Small Finance Bank’s parent firm Ujjivan Financial Services was listed in 2016. The public float of Ujjivan Small Finance Bank’s IPO was being carried out with the objective of listing within three years of getting a banking licence, to be compliant with the regulations.

Many brokerages had given a subscribe rating on the issue, given the bank’s strong fundamentals and reasonable valuations. “At the IPO price band of Rs 36-37, the stock is available at a P/BV (price to book value) of around 2.2 times (post issue) at the upper band on April-September FY20 basis,”ICICI Direct said in its report, while giving a subscribe rating. “The experience of Ujjivan Financial Services as an erstwhile microfinance institution, coupled with the ability to address mass market customers will further help Ujjivan Small Finance Bank to be among the leading small finance banks in India. At the upper price band of Rs 37, it is available at a price-to-book value of 2.5 times FY19, which is at a significant discount to its peers”, Geojit Financial Services said in its IPO note.

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