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Business News/ Markets / Ipo/  ESAF Small Finance Bank IPO: GMP, subscription status, review, other details. Apply or not?
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ESAF Small Finance Bank IPO: GMP, subscription status, review, other details. Apply or not?

ESAF Small Finance Bank IPO opens today and will close on November 7. The price band is set at ₹57 to ₹60 per equity share. ESAF Small Finance Bank IPO has reserved shares for QIBs, NIIs, and Retail Investors. A discount of ₹5 per share is offered to eligible employees.

ESAF Small Finance Bank IPO opens for subscription today. (Image: Company Website)Premium
ESAF Small Finance Bank IPO opens for subscription today. (Image: Company Website)

ESAF Small Finance Bank IPO will open for subscription today (Friday, November 3), and close on Tuesday, November 7. ESAF Small Finance Bank IPO price band has been fixed in the range of 57 to 60 per equity share of face value of 10. ESAF Small Finance Bank lot size is 250 equity shares and in multiples of 250 equity shares thereafter.

ESAF Small Finance Bank IPO has reserved not more than 50% of the shares in the public issue for Qualified Institutional Buyers (QIB), not less than 15% for Non Institutional Investors (NII), and not less than 35% of the offer is reserved for Retail Investors. A discount of 5 per equity share is being offered to eligible employees bidding in the employee reserve portion.

On Thursday, November 2, ESAF Small Finance Bank IPO raised 135.15 crores from anchor investors. The company informed the exchanges that it allocated 2,25,24,998 equity shares at 60 per share.

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BNP Paribas Arbitrage, Copthall Mauritius, Founders Collective Fund, ACM Global VCC Fund, Kotak Mahindra Life Insurance, Edelweiss Tokyo Life Insurance, ICICI Prudential Life Insurance, SBI General Life Insurance, Ananta Capital Ventures Fund, Astorne Capital VCC, and Alchemie Ventures Fund were among the foreign and domestic institutions that took part in the anchor.

Also Read: ESAF Small Finance Bank IPO opens today: GMP, issue details, review, here are 10 key things to know

ESAF Small Finance Bank IPO details

ESAF Bank IPO comprises a fresh issuance of equity shares worth 390.7 crore by the company, and an offer-for-sale (OFS) of equity shares worth 72.3 crore by three shareholders. The company plans to raise 463 crore from the IPO.

In the OFS, promoter ESAF Financial Holdings will sell shares worth 49.26 crore, while PNB MetLife India Insurance Company and Bajaj Allianz Life Insurance Company will offload shares worth 23.04 crore.

The bank proposes to utilise the net proceeds from the fresh issue to augment its Tier – I capital base to meet the future capital requirements.

The book-running lead managers for ESAF Small Finance Bank IPO are ICICI Securities, DAM Capital Advisors and Nuvama Wealth Management, while Link Intime India is the IPO registrar.

ESAF Small Finance Bank IPO subscription status

At 13:06 IST, ESAF Small Finance Bank IPO was subscribed 1.74 times on day 1. ESAF Small Finance Bank IPO retail investors portion was subscribed 1.98 times, NII portion was subscribed 2.44 times, and Qualified Institutional Buyers (QIB) portion was booked 90%, and employee portion was subscribed 1.01 times, according to data available at BSE

Also Read: ESAF Small Finance Bank IPO: Issue subscribed 70% on day 1, so far; retail portion fully booked

ESAF Small Finance Bank IPO dates

Tentative ESAF Small Finance Bank listing date is scheduled for Thursday, November 16. ESAF Small Finance Bank IPO allotment date has been fixed for Friday, November 10. If the company switches to T+3 norms then the dates will change accordingly. 

ESAF Small Finance Bank IPO GMP today

ESAF Small Finance Bank IPO GMP today or grey market premium is +22, similar to the previous session. This indicates ESAF Small Finance Bank share price were trading at a premium of 22 in the grey market on Friday, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of ESAF Small Finance Bank share price was indicated at 82 apiece, which is 36.67% higher than the IPO price of 60.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Also Read: ESAF Small Finance Bank IPO opens on November 3, price band set at 57 to 60 per share

ESAF Small Finance Bank IPO Review

BP Equities Pvt Ltd

The brokerage said in its report that authorisation to establish universal banks was granted to non-banking financial companies (NBFCs) including Bandhan and IDFC. Permission to establish small finance banks has also been granted to a few microfinance firms, an NBFC, a local area bank, and one urban co-operating bank. The rural segment accounts for 8–9% of total outstanding credit as of March 31, 2023, a relatively small percentage given its higher GDP contribution of 47%. Small finance banks (SFBs) and other market participants have a huge market opportunity as a result. SFBs can handle regional stakeholders and uphold operational effectiveness thanks to their background in microfinance.

"ESAF SFB was the fifth largest SFB in India in terms of AUM as of June 30, 2023. Amongst the SFBs, ESAF posted the fastest AUM CAGR of 39% over FY2021-23 period. The SFB’s capital adequacy ratio, which is the ratio of capital to risk-weighted assets and current liabilities, as at June 30, 2023, was 20.6%, which is the best asset quality amongst comparable peers as of June 30, 2023. 

As the lender will utilise the net proceeds of the fresh equity shares issue to augment its Tier-I capital base, its capital adequacy will enhance and lead to a stable leverage position. At the current P/BV multiple of 1.6x, we believe the company is attractively valued and advise investors to “Subscribe" from a medium to long-term perspective," said the brokerage.

LKP Securities Ltd

At higher price band ( 60), the stock is valued at 1.46(x) P/BVPS with current book value per share of 40.92. Factoring the superlative return ratios, FY23 ROA/ROE of 1.6%/19.4%, we believe that ESAF Small Finance Bank Limited is worth subscribing. Thus, we recommend to SUBSCRIBE," said the brokerage. 

BP Equities Pvt Ltd 

According to the brokerage's analysis, as of June 30, 2023, SFB had the strongest asset quality among comparable peers with a capital adequacy ratio of 20.6%. This ratio measures capital to risk-weighted assets and current liabilities. The lender will improve its capital adequacy and achieve a stable leverage position by using the net proceeds of the new equity share offering to supplement its Tier-I capital base.

"At the current P/BV multiple of 1.6x, we believe the company is attractively valued and advise investors to “Subscribe" from a medium to long-term perspective," the brokerage said. 

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 03 Nov 2023, 09:34 AM IST
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