Fincare SBF has filed a prospectus for a Rs 1330 crore IPO constraining Rs 330 crore in fresh equities and Rs 1,000 crore in offer for sale equity. Fincare SBF caters to the unbanked and underbanked populations in rural areas of India.
The small finance bank primarily caters to the unbanked and underbanked categories in Indian rural areas. According to a CRISIL report, Fincare SBF had the highest growth rate among peers between 2017 and 2020 in advances.
Fincare provides banking services and access to savings and other financial products to individuals, MSMEs and other unorganised entities.
Fincare Small Finance Bank Ltd.Objective
- The bank proposes to use the net proceeds from selling new shares to augment its capital base in tier-1 cities and to meet future capital requirements.
Why should you invest in the Fincare Small Finance Bank Ltd.IPO?
Here are our top reasons.
- The bank and promoters are backed by marquee investors, including True North Fund VLLP, Wagner Limited, Tata Opportunities Fund, LeapFrog Investments, SIDBI, Kotak Mahindra Life Insurance and Edelweiss Tokio Life Insurance.
- The bank has a proven fourteen-year record of providing savings and other financial products to rural Indian customers.
- They have an extensive network of 528 banking outlets, 219 business correspondent outlets, and 108 ATMs that covers sixteen states and three union territories.
IPO Financials
| Particulars | FY21 | FY20 |
|---|---|---|
| Revenue From Operation | NA | NA |
| EBITDA | 1,471.10 | 2,196.29 |
| EBITDA Margin (%) | NA | NA |
| Profit After Tax | 1,434.49 | 1,019.80 |
| EPS | NA | NA |
| ROE | 18.41 | 22.00 |
Know before investing
Strengths
3The brand’s strength is a customer-centric approach that provides businesses and individuals with affordable financial products and services to meet their needs.
The bank offers an inclusive product suite that offers financial products covering the entire lifecycle of rural customers.
They have a long track record of serving rural customers, especially microloan borrowers.
Risks
3Industry competition can concern prospective investors primarily because the company operates in a restrictive area.
Challenges in maintaining the growth rate associated with expansion will impact the bank’s future cash flow.
Invest if you know the unique risks associated with the micro-lending business.
Peer Comparison
| Company Name | Total Income (in Rs million) | P/E | EPS | Dividend Yield |
|---|---|---|---|---|
| Fincare Small Finance Bank Ltd. | 12,157.20 | NA | 24.43 | - |
| Peer Group | - | - | - | - |
| AU Small Finance Bank Ltd. | 49,919.76 | 41.35 | 22.78 | - |
| Bandhan Bank Limited | 30,237.37 | 16.58 | 18.78 | - |
| CreditAccess Grameen Ltd. | 17,054.80 | 25.89 | 23.20 | - |
| Equitas Small Finance Bank Ltd. | 29,277.96 | 24.27 | 2.39 | - |
| Ujjivan Small Finance Bank | 30,258.10 | 13.56 | 2.19 | - |
| Spandana Sphoorty Financial Ltd | 14,695.06 | 10.61 | 56.21 | - |
| Suryoday Small Finance Bank Ltd. | 8,541.38 | 18.39 | 13.38 | - |
