Equitas Small Finance Bank began trading on the stock exchanges at Rs 31 per share, soon after opening the stock price improved only to fall further after the initial few minutes of trade. The listing price was at a 6% discount to the issue price. Units of Equitas Small Finance Bank were offered to investors at Rs 33 per share during the bidding phase of the IPO. On Monday, stock markets were witnessing volatility just ahead of the US Presidential Elections. Sensex and Nifty, after opening with gains, were trading in the red. Equitas Small Finance Bank initial public offering was subscribed 1.95 times by investors with retail investors subscribing their portion over 2 times.
The IPO was well received by qualified institutional buyers (QIB) who subscribed their quota of the issue 3.91 times. Non-institutional investors (NII) were largely seen giving the issue a miss, subscribing their portion only 0.22 times during the three day bidding process. The public issue included a fresh issue of Rs 280 crore and an offer for sale from existing investors worth Rs 237 crore.
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The south-India based Equitas Small Finance Bank caters to the unserved and underserved segments of the economy. The credit portfolio of the bank includes agricultural loans, housing loans, loans against property, micro lending, and used and new car loans. Brokerage and research firm Choice Broking said that Equitas Small Finance Bank would be valued at P/BV of 1.2x on post issue BVPS of Rs27.1 at the higher side of the price band at Rs 33 per share. Post the issue promoter and promoter group holding has come down to 82.1%, down from 95.5% while public shareholding is now at 17.9% from 4.5% pre-issue.
Equitas Small Finance Bank’s net interest income has grown from Rs 861 crore in financial year 2018 to Rs 1,495 crore in the last fiscal year. Net profit of the small finance lender has jumped from Rs 31.8 crore in financial year 2018 to Rs 211 crore in financial year 2019 and was Rs 244 crore in fiscal year 2020. Equitas Small Finance Bank has a 16% market share, only behind AU Small Finance Bank with a 33% market share. Between financial year 2019 to financial year 2022, its is expected that Equitas Small Finance Bank will see deposits grow at 60-65% CAGR.
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