Capital Small Finance Bank share price: Capital Small Finance Bank had a weak market debut on Wednesday, February 14th. The stock opened at ₹430.25 on the NSE, indicating an 8.07 percent discount from the IPO price of ₹468. Simultaneously, on the BSE, the stock debuted at ₹435, down 7 percent from its issue price.
During the day, the stock hit an intra-day low of ₹421.10, down 10 percent from IPO price on BSE and an intra-day high of ₹462.95, which is also 1 percent below the company's issue price.
On the back of the weak listing, experts advise staying away from the stock.
"Capital Small Finance Bank (CSFB) experienced a disappointing debut, listing at ₹430.25 on NSE, reflecting a concerning 8 percent decline from its issue price of ₹468. This negative performance falls significantly short of pre-listing expectations and raises questions about investor confidence in the bank's future prospects. The negative listing highlights potential investor concerns regarding CSFB's valuation, future growth prospects, or the overall small finance banking sector. Also The small finance banking sector is highly competitive, demanding continuous performance improvements and strategic innovation. Today itself, we witnessed the listing of two small finance banks.
The negative listing necessitates a cautious approach towards CSFB. However, the view is to avoid such stocks and prefer investing in some quality stocks from the sector," said Shivani Nyati, Head of Wealth, Swastika Investmart.
However, initially, analysts had expressed optimism regarding the IPO, highlighting the company's strong credit assessment procedures and effective risk management practices.
"Capital Small Finance Bank is retail focused liability franchise with a high share of CASA. It has a secured and diversified advanced portfolio. Their credit assessment processes and risk management practices enable them to maintain good asset quality and low delinquencies. They have gained an understanding of their market and customer base over the years, enabling them to meet the financial requirements of their existing and potential customers. We believe that the valuation of the company is fairly priced and recommend a 'Subscribe-Long Term' rating to the IPO," brokerage house Anand Rathi said in its IPO review note.
Capital Small Finance Bank, established in 2016 as India’s first small finance bank, operates with a focus on offering a diverse range of banking products on both the asset and liability sides.
The ₹523. 07 crore initial public offering (IPO) of Capital Small Finance Bank was open for subscription between February 7 and February 9 with a price band in the range of ₹445-468.
Overall, the issue witnessed decent subscription in the 3 days of bidding and was subscribed 4.17 times. It saw bids for 3.26 crore shares as against 78.23 lakh in the offer. The Qualified Institutional Buyers' (QIB) category was bid 6.85 times while the the Non-Institutional Investors’ (NII) portion was booked 4.23 times. Meanwhile, the retail investor part was subscribed 2.6 times.
The issue is a combination of a fresh issue of 96 lakh shares aggregating to ₹450.00 crore and an offer for sale aggregating to ₹73.07 crore. The minimum lot size for an application is 32 shares and in multiples thereof. The minimum amount of investment required by retail investors is ₹14,976.
The bank proposes to utilise the net proceeds from the fresh issue towards augmenting the Tier-I capital base to meet future capital requirements. Further, the proceeds from the fresh issue will also be used towards meeting the expenses in relation to the offer.
Nuvama Wealth Management Limited, Dam Capital Advisors Ltd (Formerly IDFC Securities Ltd), and Equirus Capital Private Limited are the book-running lead managers of the Capital SFB IPO, while Link Intime India Private Ltd is the registrar for the issue.
In 2015, Capital SFB became the first non-NBFC microfinance entity to receive the SFB license. The company has a strong presence in semi-urban and rural areas with a branch-based operating model. Capital Small Finance Bank is headquartered in Jalandhar, Punjab, and has strategically expanded its SFB operations in northern states of India such as Punjab, Haryana, Rajasthan, Delhi, Himachal Pradesh and UT Chandigarh.
As of June 30, 2023, Capital Small Finance Bank had a presence in five states and one union territory, with a total of 172 branches and 174 ATMs. As of September 2023, the bank’s branch distribution is 42 percent in rural areas, 34 percent in semi-urban areas, and 24 percent in urban areas.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.
