Ujjivan Small Finance Bank IPO subscribed 17% so far on Day 1: Should you invest?

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Updated: December 2, 2019 11:31:59 AM

Ujjivan Small Finance Bank IPO to raise up to Rs 750 crore kicked off for subscription today. Ujjivan SFB IPO will remain open till 4th December.

Bank IPO, CSB Bank, CSB Bank IPO, initial public offering, Catholic Syrian BankThe bank has priced the sale of shares at Rs 193-195 per piece and the issue will be open between November 22-26.

Ujjivan Small Finance Bank IPO to raise up to Rs 750 crore kicked off for subscription today. Ujjivan SFB IPO will remain open till 4th December, Wednesday. The issue received bids for 2.06 crore shares, as against the issue size of 12.39 crore shares, a subscription of 17% so far, data from NSE showed. For the public offer, the bank has set a price band of Rs 36-37 per share. 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. Notably, Ujjivan Small Finance Bank’s IPO is being carried out with the objective of listing within three years of getting a banking licence, to be compliant with the regulations. 

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The minimum bid lot has been fixed at 400 shares and in multiples of 400 shares thereafter. Investors in the retail category can apply for a maximum of 13 lots, implying a maximum application money for retail (upper price band for 13 lot) at Rs 1,92,400. According to timeline shared by various brokerages the allotment is likely to be finalised by 9th of December while the listing on the exchanges is likely to be complete by the 12th of December. Ujjivan Small Finance Bank is a mass market focused bank catering to the financially underserved segments. It serves over 49 lakh customers across 24 states and union territories, according to a report by HEM Secvurities. Its gross loan book stands at Rs 12,864 crore and the deposit base at Rs 10,130 crore as of September 30, 2019. In FY19, it had reported a profit of Rs 199 crore, with net interest margin of 10.9%.

Many brokerages have 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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