Suryoday Small Finance Bank IPO: What you should know

The Suryoday Small Finance Bank IPO date has been announced; the bank will launch its initial public offering on March 17. The Rs 582.33-crore offering will close for subscription on March 19. The price band for the IPO is Rs 303-305 per share, while the face value of a share is Rs 10. The offer accounts for a fresh issue of 81.50 lakh shares. The IPO also consists of an offer-for-sale (OFS) of 1.09 shares.

Those who are offering shares via OFS include Gaja Capital, HDFC Holdings, International Financial Corporation (IFC), HDFC Holdings, DWM (International) Mauritius Ltd, Americorp Ventures, IDFC First Bank and Kotak Mahindra Life Insurance Company. While IFC is offering shares of up to 48.37 lakh, Gaja Capital is offering shares of around 20 lakh. While DWM (International) Mauritius Ltd will offload 18 lakh shares, HDFC Holdings Ltd offers 7.5 lakh shares.

As many as five IPOs are in the offing this week, starting March 15, on the back of positive sentiment in the markets. The five IPOs are estimated to raise Rs 3764 crore, according to reports. Earlier, between January 1 and March 2, nine companies raised funds to the tune of Rs 10,950 crore via IPOs.

Other details of the Suryoday Small Finance Bank IPO

• While half the total issue is reserved for qualified institutional investors, 35 per cent is open for retail investors.
• The remaining 15 per cent is open for non-institutional investors.
• Five lakh equity shares are allocated for employees of the bank who meet eligibility criteria. These employees will also get a discount of Rs 30 per share.
• Investors in the Suryoday Small Finance Bank IPOcan make bids for 49 shares at the least (market lot) and in multiples of the same after that. The minimum investment is Rs 14,945.
• The Suryoday Small Finance Bank IPOlead managers include ICICI Securities Limited, Axis Capital Limited, SBI Capital Markets Limited and IIFL Securities Limited.
• TheSuryoday Small Finance Bank IPO date for allotment is March 24, 2021

Where will the fresh issue funds be channelised?

The small finance bank plans to use the proceeds from the IPO towards increasing its Tier -1 capital base for future capital needs. The bank posted Rs 54.8 core profits for the quarter ended December 31, 2020. The small finance bank’s capital to risk (weighted) assets ratio or CRAR was at 29.57 per cent with Tier 1 capital of 28.61 per cent, which is the highest among small finance banks. The ratio is a reflection of a bank’s capital in relation to its risk.

What you should know about the company?

The Suryoday Small Finance Bank IPO is a Mumbai-based bank set up in 2008. The bank, among the country’s well-known small finance banks, caters to consumers who are underbanked or unbanked thus far. The bank has a footprint in ten states and offers products such as shopkeeper loans, Vikas loans and MFI loans. They also offer digital banking and NPCI payment systems. Tamil Nadu, Odisha and Maharashtra constitute 77 per cent of the bank’s lending.

Nearly 76 per cent of Suryoday’s loan portfolio included microloans to women and stood at Rs 3711 crore towards the end of March 2020. The average collection efficiency for the bank was 82 per cent for December 2020.

The small finance bank had raised Rs 150 crore in a pre-IPO placement from SBI Life Insurance Company and Axis Asset Management Company.

The industry

Suryoday is among a total of four small finance banks to come out with IPOs. The other three include Ujjivan Small Finance Bank, AU Small Finance Bank and Equitas Small Finance Bank. Suryoday does not have a holding company unlike Ujjivan bank or Equitas.

The other peers of the bank include CreditAccess Grameen Lits, Bandhan Bank Ltd and Spandana Sphoorty Financial Ltd. The largest industry P/E is 48.34x belonging to AU Small Finance Bank and the smallest is at 12.14x of Spandana Sphoorty Finance Ltd. The average P/E for the industry stands at 25.15x. The P/E ratio is the price to earnings ratio, ie, the ratio of the current share price vis-a-vis its earnings per share.

According to the Reserve Bank of India mandate, small finance banks are required to be listed within three years of touching a net worth of Rs 500 crore.

Now that you know all about Suryoday Small Finance Bank IPO date and the details of the offer, you too can apply for this IPO offer and others, through your Angel One demat account. All you need to do is open a demat account by filling in your details online and get going in quick time.