Utkarsh Small Finance Bank Limited IPO (800 × 450 px)
While the US banking sector saw a couple of its major banks collapse in the past months, the Indian banking sector is seen to be quite robust. RBI has managed to keep inflation in check and thereby maintain the interest rates in the country. This has created a favourable market for banks and the latest IPO offering is indeed from the banking sector. Utkarsh Small Finance Bank Limited, a leading name in the small finance bank segment, is coming out with its IPO on 12th July 2023.
Utkarsh Small Finance Bank Limited IPO will open for subscription on 12th July 2023 and will close on 14th July 2023.
Here are all the important details of Utkarsh Small Finance Bank Limited, including investment price band, allotment date, GMP, benefits, risks of investing in this IPO, and more.
The key details of Utkarsh Small Finance Bank Limited are as under.
The size of the IPO and different categories of the issue are:
| Category | Details |
| IPO Opening Date | 12th July 2023 |
| IPO Closing Date | 14th July 2023 |
| Listing | NSE, BSE |
| Issue Type | Book Built Issue IPO |
| Face Value of shares | Re. 10 per share |
| IPO Price Band | Rs. 23- Rs. 25 per share |
| IPO Size | Rs. 500 crores |
| Offer for Sale | – |
| Fresh Issue | Rs. 500 crores |
The important dates for Utkarsh Small Finance Bank Limited IPO are highlighted below:
| Event | Date |
| Opening date | 12th July 2023 |
| Closing Date | 14th July 2023 |
| Allotment date | 19th July 2023 |
| Refund Date | 20th July 2023 |
| Share Credit Date | 21st July 2023 |
| Listing Date | 24th July 2023 |
Investors can subscribe to Utkarsh Small Finance Bank Limited shares in pre-defined lots. The details of the lot sizes for this IPO are mentioned below:
| Category | Details |
| Investments in lots | Minimum – 1 lotMaximum – 13 lots |
| Investment amount | Minimum – Rs. 13,800 – 15,000Maximum – Rs. 1,95,000 |
| Shares | Minimum – 600Maximum – 7800 |
Here’s the summary of reservation for different applicant categories in this IPO:
| Category of Investor | Reservation Percentage |
| Retail Individual Investors | 10% |
| QIB (Qualified Institutional Buyers) | 75% |
| NII (Non-Institutional Bidders) | 15% |
This IPO is completely a fresh issue. The proceeds from the issue will be utilised in the following manner.
Utkarsh Small Finance Bank Ltd, established in 2016, is a Small Finance Bank (SFB) operating in India and offering a range of financial services. Some of them include:
The bank offers comprehensive solutions to its customers, including individuals and businesses. It has gained recognition for achieving the second fastest growth in Assets Under Management (AUM) among SFBs with AUM exceeding Rs. 50 billion in both Fiscal 2019 and Fiscal 2022.
Utkarsh SFB provides several notable features to its customers, such as a Top-up/Balance Transfer facility, a streamlined documentation process for hassle-free processing, loan amounts of up to Rs. 50 crores, tenures of up to 30 years, and convenient eligibility criteria for both salaried and self-employed individuals.
The company maintains a diverse product portfolio, with a particular focus on microfinance as a significant business segment. Its asset products encompass various offerings, including
Utkarsh Small Finance Bank Limited’s financials are given in the table below:
| Year | Total Assets (Rs. in cr) | Operating Revenue (Rs. in cr) | Profit after tax (Rs. in cr) | Basic EPS | Return on Net Worth |
| Mar-2023 | 19,117 | 2,804 | 404 | Rs. 4.52 | 20.22% |
| Mar-2022 | 15,064 | 2,034 | 61 | Rs. 0.70 | 3.91% |
| Mar-2021 | 12,138 | 1,706 | 112 | Rs. 1.46 | 8.17% |
(Source: RHP)
Some of the key strengths of Utkarsh Small Finance Bank Limited that investors can take note of are
| Category | Details |
| Business model | The bank has a sound understanding and presence of the microfinance segment in the rural and semi-urban areas backed by a stable growth with cost-effective operations.They have growing deposits with a focus on retail deposits, risk management, and effective operations. |
| Other merits | It enjoys a diversified distribution network with significant cross-selling opportunities.The bank holds a leadership position which complements it’s strengths |
Here are some of the risks that investors of Utkarsh Small Finance Bank Limited IPO should know:
| Category | Details |
| Business viability and profitability | The bank has a higher dependency on top 5 depositors or top 20 depositors.The bank has had negative operating cash flows in the past.The financial health of the bank is highly dependent on its micro-banking segment currently, particularly Joint Liability loan groups, and any adverse development can result in Bank’s business |
| Other concerns | The bank is part of an industry that is quite fragmented facing competition from many large and small players. External factors, including political, economic, regulatory, and other influences beyond the bank’s control, have the potential to adversely affect its business and operational results.Bank has previously engaged in related party transactions, and there is a possibility to repeat the same which could give rise to conflicts of interest. |
As of July 11th, 2023, the grey market premium for the shares of Utkarsh Small Finance Bank Limited IPO is Rs.12 as per market observers. This means the shares are expected to list at a premium of Rs.12 per share over the listing cap price of Rs 25.
Utkarsh Small Finance Bank Limited is a well-known name in the micro-financing segment. However, there can be concerns related to reduced operating cash flows and higher dependency on the monetary policies issued by RBI from time to time for its success. Although the IPO is attractively priced, investors need to carefully analyse it with respect to factors like the company’s financials, risks, and industry dynamics before making any investment decisions.
Investors can invest in this IPO through the Fisdom app.
The RONW of Utkarsh Small Finance Bank Limited is 20.2% and is among the highest as compared to its peers.
The company offers a diverse range of asset products, including micro banking loans, retail loans (both secured and unsecured), wholesale lending for short-term and long-term loans, affordable housing loans, loans for commercial vehicles and construction equipment, and gold loans.
The growth rate or CAGR of the bank’s loan book and deposits is 38% and 32% respectively.
The latest GMP of Utkarsh Small Finance Bank Limited IPO is Rs. 12 as of July 11th, 2023.
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