Utkarsh Small Finance Bank IPO: All You Need to Know
Utkarsh Small Finance Bank has announced its initial public offering (IPO) which is set to open on July 12, 2023, and close on July 14, 2023. The bank is offering shares in the price range of Rs 23-25 per share. This IPO will be the fifth bank in the category to be listed on the bourses.
Utkarsh Small Finance Bank is a Varanasi-based lender that started its banking journey on January 23, 2017, after transitioning from an NBFC-MFI. The bank has a strong capital base, with a net worth of Rs 1,200 crore as of March 31, 2023. The bank has also expanded its network to 24 states and union territories in India, with a total of 528 banking outlets. Here you can get more details about President Joe Biden.
The IPO is expected to help the bank raise funds to expand its operations and improve its digital capabilities. The bank’s management has expressed confidence in the success of the IPO, citing the bank’s strong financials and customer base. Investors are eagerly awaiting the IPO, which is expected to be oversubscribed given the strong demand for financial services in India.
About Utkarsh Small Finance Bank
Utkarsh Small Finance Bank is a Varanasi-based small finance bank that offers a range of financial services to its customers. It was incorporated in 2016 and was granted a small finance bank license by the Reserve Bank of India in 2018. The bank aims to provide financial services to the unbanked and underbanked population of India, especially in rural and semi-urban areas.
Utkarsh Small Finance Bank offers a range of products and services, including savings accounts, current accounts, fixed deposits, loans, insurance, and more. The bank has a network of branches and banking correspondents across various states in India. As of March 31, 2023, the bank had 1.8 million customers and a loan book of Rs. 10,000 crore.
The bank has a strong focus on financial inclusion and aims to provide affordable and accessible financial services to all. It has a range of products and services tailored to the needs of its customers, including microfinance loans, agriculture loans, and more. The bank’s mission is to empower its customers and help them achieve their financial goals.
Utkarsh Small Finance Bank has received several awards and recognitions for its services, including the Best Small Finance Bank award at the Banking Frontiers Awards in 2021. The bank has a strong management team with extensive experience in the financial services industry. It is backed by several investors, including Sequoia Capital, Aavishkaar Capital, and more.
Details of the IPO
Utkarsh Small Finance Bank is set to launch its initial public offering (IPO) on July 12, 2023, and close on July 14, 2023. The bank aims to raise Rs 500 crore through the IPO by issuing fresh equity shares. The bank has already received approval from the Securities and Exchange Board of India (SEBI) for the IPO. The IPO will be managed by Axis Capital, ICICI Securities, and SBI Capital Markets.
The price band for the Utkarsh Small Finance Bank IPO is set at Rs 23-25 per share. The bank has set a minimum bid lot of 600 shares and in multiples of 600 thereafter. The IPO will be available to both retail and institutional investors.
The listing date for the Utkarsh Small Finance Bank IPO has not been announced yet. However, it is expected that the shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) within a few weeks after the IPO closes.
Utkarsh Small Finance Bank is a small finance bank that operates in North India. The bank offers a range of financial services, including microfinance, personal loans, and savings accounts. The bank has a strong presence in Uttar Pradesh, Bihar, and Jharkhand. The bank has a network of 475 branches and micro-banking outlets across 12 states in India.
Investors who are interested in investing in Utkarsh Small Finance Bank’s IPO should carefully consider the risks and benefits of investing in the bank. They should also consult with their financial advisors before making any investment decisions.
Lead Managers of the IPO
Utkarsh Small Finance Bank has appointed four lead managers for its upcoming IPO. The lead managers are responsible for managing the IPO process and ensuring that it is successful. The four lead managers for Utkarsh Small Finance Bank IPO are:
- Axis Capital Limited
- ICICI Securities Limited
- JM Financial Limited
- SBI Capital Markets Limited
These four lead managers have extensive experience in managing IPOs and are known for their expertise in the financial markets. They will work closely with Utkarsh Small Finance Bank to ensure that the IPO is successful and meets the expectations of investors.
Axis Capital Limited is a leading investment bank in India and has been involved in several successful IPOs in the past. ICICI Securities Limited is a subsidiary of ICICI Bank and is one of the largest securities firms in India. JM Financial Limited is a leading financial services company in India and has a strong track record in managing IPOs. SBI Capital Markets Limited is a subsidiary of State Bank of India and is one of the leading investment banks in India.
The appointment of these four lead managers is a positive sign for Utkarsh Small Finance Bank and indicates that the bank is well-prepared for its IPO. The lead managers will work closely with the bank to ensure that the IPO is priced correctly, marketed effectively, and oversubscribed. With their expertise and experience, the lead managers are expected to ensure that the IPO is successful and meets the expectations of investors.
Registrar of the IPO
The registrar of the Utkarsh Small Finance Bank IPO is KFin Technologies Private Limited.
KFin Technologies is one of the largest registrar and transfer agents in India, with over 25 years of experience in the industry. The company offers a wide range of services, including share registry, mutual fund registry, and corporate registry services. It has a pan-India presence and serves over 90 million investors across various sectors.
As the registrar of the Utkarsh Small Finance Bank IPO, KFin Technologies will be responsible for processing and verifying the applications, allocating shares, and refunding the excess amount, if any, to the investors. The company will also be responsible for coordinating with the stock exchanges, bankers, and other intermediaries involved in the IPO process.
Investors can contact KFin Technologies for any queries or concerns related to the IPO, such as the status of their application, allotment of shares, or refund of excess amount. The company has a dedicated customer care team that can be reached through phone, email, or online chat.
Overall, KFin Technologies has a strong reputation in the industry and is well-equipped to handle the registrar duties of the Utkarsh Small Finance Bank IPO.
Objectives of the IPO
Utkarsh Small Finance Bank has announced its Initial Public Offering (IPO) with the primary objective of augmenting its Tier 1 capital base to meet its future capital requirements. The bank aims to raise Rs. 500 crores through the IPO.
The IPO is expected to provide liquidity to the existing shareholders of the bank. The issue will comprise a fresh issue of equity shares of Rs. 10 each, aggregating up to Rs. 500 crores. The bank plans to use the net proceeds from the IPO to augment its Tier 1 capital base to meet its future capital requirements.
The bank has appointed KFin Technologies Private Limited as the registrar to the issue. The IPO will open for subscription on July 12, 2023, and close on July 14, 2023. The price band for the IPO is set at Rs. 23-25 per share. The minimum order quantity is 600 shares, and in multiples of 600 shares thereafter.
Retail investors can bid for a minimum one lot of 600 equity shares up to a maximum of 13 lots. One lot of Utkarsh Small Finance Bank shares will cost Rs. 15,000 in the IPO. The shares will be listed on both BSE and NSE on July 24, 2023.
Strengths of Utkarsh Small Finance Bank
Utkarsh Small Finance Bank has several strengths that make it a promising investment opportunity. Here are some of its key strengths:
1. Strong Financial Performance
Utkarsh Small Finance Bank has shown consistent growth in its financial performance over the years. As of March 31, 2021, the bank’s total assets under management (AUM) stood at INR 6,287 crore, an increase of 70% from the previous year. Its net interest income (NII) also grew by 71% to INR 228 crore during the same period. These figures indicate that the bank has a strong financial foundation and is well-positioned to grow further.
2. Diversified Product Portfolio
Utkarsh Small Finance Bank offers a range of financial products and services, including savings accounts, fixed deposits, loans, and insurance. This diversified product portfolio not only helps the bank attract a wider customer base but also reduces its risk exposure by spreading it across different product categories.
3. Focus on Rural and Semi-Urban Markets
Utkarsh Small Finance Bank has a strong presence in rural and semi-urban areas, which are often underserved by traditional banks. The bank’s focus on these markets has helped it build a loyal customer base and establish itself as a trusted financial partner in these regions.
4. Experienced Management Team
Utkarsh Small Finance Bank has a highly experienced management team that has a proven track record of success in the banking industry. The team’s expertise in areas such as risk management, product development, and customer acquisition has been instrumental in the bank’s growth and success.
5. Strong Technology Infrastructure
Utkarsh Small Finance Bank has invested heavily in its technology infrastructure, which has helped it streamline its operations and provide a seamless banking experience to its customers. The bank’s digital platforms, including its mobile app and internet banking portal, are user-friendly and offer a range of features that make banking convenient and hassle-free.
Overall, Utkarsh Small Finance Bank’s strong financial performance, diversified product portfolio, focus on rural and semi-urban markets, experienced management team, and strong technology infrastructure make it a promising investment opportunity.
Risks and Challenges
Investing in the Utkarsh Small Finance Bank IPO comes with its own set of risks and challenges. Here are a few of the most significant ones to consider:
Geographic Concentration Risk
As per the Economic Times, Utkarsh Small Finance Bank has a high concentration of branches in Uttar Pradesh and Bihar, which accounted for 68.2% of its total advances as of December 31, 2020. Any adverse developments in these regions could impact the bank’s profitability and asset quality.
Dependence on Microfinance and MSE Segments
Utkarsh Small Finance Bank’s business model is heavily dependent on the microfinance and micro and small enterprise (MSE) segments. As per , the bank’s microfinance and MSE loan portfolio accounted for 87.4% of its total advances as of December 31, 2020. Any adverse developments in these segments could impact the bank’s profitability and asset quality.
Competition from Established Banks and NBFCs
Utkarsh Small Finance Bank faces intense competition from established banks and non-banking financial companies (NBFCs) that have a strong presence in the retail banking segment. The bank may find it challenging to compete with these players in terms of pricing, brand recognition, and distribution network.
Regulatory Compliance Risk
As a financial institution, Utkarsh Small Finance Bank is subject to various regulatory requirements and compliance obligations. Any non-compliance with these regulations could result in penalties, fines, or other adverse consequences that could impact the bank’s financial performance.
Impact of COVID-19
The COVID-19 pandemic has had a significant impact on the Indian economy, and the banking sector has not been immune to its effects. As per, Utkarsh Small Finance Bank suffered a minor setback for FY22 following the pandemic’s impact. Any further adverse developments related to the pandemic could impact the bank’s financial performance.
Utkarsh Small Finance Bank has shown steady financial performance over the years. As of March 2023, the bank’s deposits have increased from Rs. 7507.56 crores to Rs. 13710.14 crores, indicating a significant increase in the number of accounts opened in the bank. The bank’s total income for the fiscal year 2022 was Rs. 1577.10 crores, a growth of 21.88% over the previous year.
The bank’s net interest income (NII) has also shown a positive trend, growing from Rs. 564.55 crores in FY 2021 to Rs. 756.10 crores in FY 2022. The net profit for the fiscal year 2022 was Rs. 186.22 crores, a growth of 28.51% over the previous year.
In terms of asset quality, the bank has maintained a healthy ratio of gross non-performing assets (GNPA) to gross advances. As of March 2023, the GNPA ratio stands at 2.05% compared to 2.47% in March 2022. The net NPA ratio has also improved from 1.14% in March 2022 to 0.94% in March 2023.
The bank’s capital adequacy ratio (CAR) as of March 2023 stands at 22.76%, which is well above the regulatory requirement of 15%. The bank’s return on assets (ROA) has also improved from 1.21% in FY 2021 to 1.34% in FY 2022.
Overall, Utkarsh Small Finance Bank’s financial performance has been steady, and the bank has maintained a healthy asset quality and capital adequacy ratio.
How to Apply for Utkarsh Small Finance Bank IPO
Investors who are interested in applying for Utkarsh Small Finance Bank IPO can do so through their preferred broker or by using online platforms that provide IPO application services. Here are the steps to apply for the IPO:
- Open a Demat Account: Investors must first open a Demat account with a Depository Participant (DP) to apply for the Utkarsh Small Finance Bank IPO. This account will hold the shares that the investor purchases.
- Check Availability: Before applying, investors must ensure that the Utkarsh Small Finance Bank IPO is available for subscription. They can check this by visiting the website of the stock exchange where the IPO is listed or by checking with their broker.
- Fill Application Form: Investors can fill the application form provided by their broker or online platform. They must provide their personal and bank details, the number of shares they wish to apply for, and the price they are willing to pay.
- Make Payment: Investors can make payment for the IPO using net banking, UPI, or ASBA (Application Supported by Blocked Amount) facility. ASBA is a payment method where the investor’s bank account is blocked for the amount of the IPO until the shares are allotted.
- Submit Application: Once the application form and payment are complete, investors must submit their application to their broker or online platform. They will receive a confirmation message or email once the application is submitted successfully.
It is important to note that the allotment of shares in the Utkarsh Small Finance Bank IPO is done through a lottery system, and there is no guarantee that an investor will receive the number of shares they applied for. Therefore, investors should carefully consider their investment goals and risk appetite before applying for the IPO.
Utkarsh Small Finance Bank’s IPO has received a lot of attention from investors and the media. The bank has a strong presence in 26 states and Union Territories in India as of March 31, 2023, and offers a range of asset products, including Microbanking loans, retail loans, wholesale lending, housing loans, commercial vehicle/construction equipment loans, and gold loans.
The IPO is expected to raise Rs 500 crore and will be used towards the augmentation of the bank’s Tier I capital base and to meet future capital requirements. The IPO opens on July 12, and the price band has been set at Rs 23-25 a share.
Investors are showing interest in the IPO due to the positive sentiment towards small finance banks and microfinance. The bank has shown improvement in asset quality, growth, and profitability in the past year. The increased retail participation in the IPO market is also driving the IPO boom in India.
Overall, the Utkarsh Small Finance Bank IPO will be an interesting test of investor interest in small finance banks and microfinance. The bank has a strong presence in India and offers a range of asset products, which makes it an attractive investment opportunity. Investors will be watching closely to see how the IPO performs and whether it meets their expectations.