Capital Small Finance Bank Limited lists at a discount at Rs 430 per share

Capital Small Finance Bank Limited operates as a small finance bank. The company has established a robust presence in semi-urban and rural areas, employing a branch-based operating model, debuted on the Indian stock market today.

Upon its debut on the BSE, the Capital Small finance Bank stock opened at Rs 435 per share, reflecting a discount of 7.05% compared to the final issue price of Rs 438 per share. The market capitalisation of the company stands at Rs 1959 crore on the BSE. Meanwhile, on the NSE, the stock debuted at Rs 430.25 per share, indicating a discount of 8.07% compared to the final issue price.

IPO Proceeds:

The bank intends to allocate the Net Proceeds from the Fresh Issue to bolster the Bank’s Tier-I capital base, addressing future capital requirements. Additionally, the funds generated through the Fresh Issue will be utilised to cover expenses associated with the Offer.

Company profile:

Incorporated in 1999, Capital Small Finance Bank Limited operates as a small finance bank. In a significant milestone in 2015, Capital SFB became the first non-NBFC microfinance entity to be granted the small finance bank license. The company has established a robust presence in semi-urban and rural areas, employing a branch-based operating model.

Targeting middle-income customer segments with an annual income ranging from ₹0.4 to 5 million, Capital Small Finance Bank aspires to serve as the primary banker for these customers. This commitment is realized through a strategic blend of product offerings, dedicated customer service, a network of physical branches, and the integration of digital channels.

With its headquarters located in Jalandhar, Punjab, Capital Small Finance Bank has strategically expanded its small finance bank operations in the northern states of India, including Punjab, Haryana, Rajasthan, Delhi, Himachal Pradesh, and Chandigarh.

IPO Subscription details:

On February 09, 2024, the final day of the IPO window, the IPO witnessed an impressive response, with a subscription rate of 4.17 times. The public issue received remarkable interest, with the retail category subscribed 2.60 times, while the QIB and NII category reached a subscription rate of 6.86 and 4.23 times respectively.

The IPO price band was between Rs 445 and Rs 468, with a face value of Rs 10 per share and a lot size of 32 shares. The total size of the company’s IPO was Rs 523.07 crore, and the final share issue price was fixed at Rs 468 each.

Financial Performance:

Conclusion: 

The key dilemma for investors lies in whether to hold onto their shares. Those who applied for the IPO solely with the intention of capitalising on listing gains have been disappointed, as the stock debuted at a discount. Investors who applied for the IPO purely for listing gains may consider closing their positions. Conversely, investors with a higher risk tolerance might hold onto their shares for the medium to long term, as this strategy could yield benefits over time.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.