Utkarsh Small Finance Bank IPO

Utkarsh Small Finance Bank Ltd, also known as Utkarsh SFB, was established on April 30, 2016. The bank is a subsidiary of Utkarsh CoreInvest Ltd and has made a significant mark in the Indian banking sector by achieving the third highest growth in Gross Loan Portfolio from 2019 to 2023 among SFBs with a portfolio exceeding ₹60 billion.

Utkarsh SFB offers a diverse range of financial products and services such as micro-banking loans, retail loans and wholesale lending tailored to meet the unique needs of its customers. The bank's offerings include asset products for customers primarily in unbanked and underbanked regions, and liability products in the form of deposits sourced from customers across various regions.

The bank has a wide operational footprint across India, with a presence in 26 States and Union Territories. As of March 31, 2023, Utkarsh SFB had 830 banking outlets and a workforce of 15,424 employees. 

Utkarsh Small Finance Bank Limited IPO Details

Utkarsh Small Finance Bank Limited IPO is a fresh issue comprising 200,000,000 shares

aggregating up to ₹500.00 Cr. The price band is set between ₹23 to ₹25 per share with a face value of ₹10 per share. The lot size is 600 shares. It will be listed on BSE and NSE. 

Utkarsh Small Finance Bank Limited IPO Objectives:

The bank proposes to utilise the net proceeds from the issue towards: 

• Augmenting its Tier–1 capital base to meet its future capital requirements. 
• Meeting the expenses in relation to the issue.

Peer Details

Equitas Small Finance Bank Limited, Ujjivan Small Finance Bank Limited, Credit Access Grameen Limited, Spandana Sphoorty Financial Limited and Bandhan Bank Limited are few of the listed peer companies operating in the same business line.

Utkarsh Small Finance Bank Limited Noteworthy Highlight: 

• The company is an SFB in India and has recorded the third fastest Gross Loan Portfolio growth between fiscal 2019 and fiscal 2023 among SFBs with Gross Loan Portfolio of more than ₹ 60 billion.
• Utkarsh SFB’s operations are focused in rural and semi-urban areas and as of March 31, 2023, it had 3.59 million customers (both deposit and credit) majorly located in rural and semi-urban areas primarily in the states of Bihar and Uttar Pradesh that, in fiscal 2022, were among the states with best asset quality but with low and moderate credit penetration.
• The company’s total income has increased from ₹17,058.36 million in fiscal 2021 to ₹20,336.46 million in fiscal 2022 and further to ₹28,042.86 million in fiscal 2023. However, profit after tax declined from ₹1,118.15 million in fiscal 2021 to ₹614.62 million in Fiscal 2022. While the profit after tax was ₹4,045.02 million in fiscal 2023.

Utkarsh Small Finance Bank Financials

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Strengths

1. The company’s total customers (both deposit and credit) have been continuously increasing and the customer base grew from 2.90 million customers as of March 31, 2021 to 3.14 million customers as of March 31, 2022 and further to 3.59 million customers as of March 31, 2023.

2. Utkarsh SFb has an extensive physical network of banking outlets and as of March 31, 2023, it has 830 banking outlets across 26 States and Union Territories covering 253 districts in India of which 522 banking outlets are located in rural and semi-urban areas (combined).

Risks

1. A significant portion of the company's advances in the microbanking segment are towards customers located in the states of Bihar and Uttar Pradesh, and any adverse changes in the conditions affecting the region can adversely impact its business, financial condition, results of operations and cash flows.

2. The company has a high proportion of bulk deposits. A partial or complete withdrawal of such deposits by any of its customers could adversely affect Utkarsh SFB’s business, operations, and financial condition.

Peer Comparison