ESAF Small Finance Bank IPO opens, GMP rises over 36%; should you subscribe to the issue-

ESAF Small Finance Bank IPO opens, GMP rises over 36%; should you subscribe to the issue?

ESAF Small Finance Bank IPO: ESAF Small Finance Bank IPO opened for public subscription today and will close on Tuesday, November 7, 2023. The bidding for anchor investors concluded on Thursday, wherein the Bank collected Rs 135.15 crore. The price band for its public issue at Rs 57-60 per equity share of face value Rs 10 each. At the upper end of the price band, the company’s promoters and shareholders seek to raise Rs 463 crore from the IPO. Ahead of the public issue, ESAF Small Finance Bank shares’ grey market premium (GMP) rose 36.67%, over the upper end of the share price on offer.

The IPO comprises a fresh issue of 65,116,667 shares aggregating up to Rs 390.70 crore, and an Offer-For-Sale (OFS) with promoters offloading 12,050,000 shares aggregating up to Rs 72.30 crore. For potential investors, the bidding starts at a minimum of 250 equity shares, with subsequent bids in multiples of 250 equity shares. The minimum amount of investment required by retail investors is Rs 15,000. The shares are likely to get credited on Wednesday, November 15, 2023, and listed on stock exchanges on Thursday, November 16, 2023, according to reports.

Promoted by ESAF Financial Holdings Pvt (EFHPL), ESAF Small Finance Bank (ESAF SFB) was incorporated on May 5, 2016. The Bank was granted the RBI’s Final Approval to carry on business as an SFB, on November 18, 2016. The ‘ESAF’ brand has been built over more than 27 years, beginning in 1995 when ESAF Foundation started its micro loan activities.

Should you apply for the ESAF Small Finance Bank IPO?LKP Securities: Subscribe

“At a 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 ‘Subscribe’ to the IPO.”  

Geojit: Subscribe

“At the upper price band of Rs 60, ESFBL is available at a P/BV of 1.8x (FY23), which appears reasonably priced compared to its peers. The huge market opportunity in the rural segment, increased focus on diversifying their portfolio and expanding their reach, access to low-cost funds, & huge cross-sell opportunities augur well for the small finance banking sector. With consistent growth in loan books and deposits, healthy return ratios, and an increasing pan-India presence, we assign a ‘Subscribe’ rating on a medium- to long-term basis.”

StoxBox: Subscribe

“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.”

(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)