Equitas SFB lists at Rs 31 against issue price of Rs 33 per share

Equitas Small Finance Bank made a weak debut at the bourses as shares of the company listed at Rs 31, 6 per cent lower against the issue price of Rs 33 per share on the BSE on Monday.

At 10:01 am, the stock was trading 6.5 per cent lower at Rs 30.85, after hitting a low of Rs 30.10 in intra-day so far. It touched a high of Rs 31.45 on the BSE, the exchange data shows. Around 381,000 equity shares changed hands on the counter on the BSE.

The initial public offer (IPO) of Equitas Small Finance Bank was subscribed nearly two times. The Rs 517-crore IPO had received bids for 226 million shares against 116 million shares on offer, according to data available with the stock exchange. The qualified institutional buyers (QIBs) category was subscribed 3.91 times and retail individual investors category was subscribed 2.08 times, while non-institutional investors’ category was subscribed just 22 per cent, data shows.

The bank proposed to utilise the net proceeds from the offer towards augmenting bank's Tier I capital base to meet bank's future capital requirements such as organic growth and expansion and to comply with the regulatory requirements for enhanced capital base, as may be prescribed in the future.

The listing of the bank is also in line with terms of the Reserve Bank of India (RBI) in-principle approval, RBI final approval and small finance bank (SFB) licensing guidelines, requiring the bank to list its equity shares on the stock exchanges within three years from the date of commencement of business by the bank.

Given the headwinds in terms of slowdown in loan growth and potential rise in non-performing assets (NPAs) due to Covid-19, change in regulatory norms, and the interest waiver issue, listing gains look difficult, say analysts. That said, the long-term prospects of the bank remain strong.

Strong fundamentals such as income growth of 29 per cent; deposits and disbursements growth of 39 per cent and 31 per cent CAGR over FY18-20; healthy asset quality with gross NPA and Net NPA at 2.72 per cent and 1.66 per cent; strong retail liability portfolio, customized credit assessment procedures, strategic distribution network and customer centric approach are some of the factors that augur well for the business, analysts say. CLICK HERE FOR FULL REPORT