 "Capital Small Finance Bank lists on a tepid note; dips 8% below issue price")
Post listing, it hit a high of Rs 436 and a low of Rs 421 in intra-day trade. At 10:19 am; Capital SFB was trading at Rs 431.90. A combined 1.2 million equity shares changed hands on the NSE and BSE. In comparison, the S&P BSE Sensex was down 0.64 per cent at 71,097.
The Rs 523-crore issue was subscribed 4.17 times. It was subscribed 2.6 times in the retail category and 4.23 times in the Non-Institutional Investors’ (NII) category, while the Qualified Institutional Buyers’ (QIB) portion was booked 6.86 times.
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Capital SFB targets middle-income customer segments with anannual income of Rs 0.4-5 million. They aim to be the primary banker for these customers through a mix of product offerings, customer service, physical branches, and digital channels. As of September 30, 2023, it had 173 branches and 175 ATMs, with 76.30% of its branches located in rural and semi-urban areas.
Capital SFB 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. The bank plans to continue to expand its business.
The bank has a diversified portfolio with sizable book in multiple asset classes with proportion of secured lending of 99.85 per cent as on September 30, 2023. As on September 30, 2023 and March 31, 2023 respectively, 99.85 per cent and 99.82 per cent of its loan book was secured with 84.26 per cent and 85.16 per cent of the loans secured by immovable properties.
Capital SFB stands out as the pioneer non-NBFC microfinance entity to land the coveted SFB license in 2015. Currently rooted in the North,this ambitious player eyes nationwide expansion through an extensive branch network in the coming years. Savvy investors seeking long-term gains might consider this a promising opportunity, according to analysts at SMC Global Securities.
Analysts at Indsec Securities and Finance believed the issue was priced higher than average valuation which would result in limited upside. Amongst its Peer Set of Small Finance banks, Capital SFB has lower RoA and RoNW (compared with Peer Set Average).
The brokerage firm had recommended the IPO to “Subscribe for Long Term” to the issue given strong Retail deposit book with lowest cost of deposits, healthy capital position with CRAR of 20.7 per cent, diversified portfolio and non-reliance on MFI, management is focused to grow book organically and strengthen operational & profitability metrics and the company promoted by First-gen entrepreneur backed by strong management.