Equitas Small Finance Bank IPO: Study Before Subscribing

Equitas Small Finance Bank IPO: Study Before Subscribing

The banking subsidiary of Equitas Holdings, Equitas Small Finance Bank’s IPO finally will open for bidding on October 20, 2020. It’s a pending IPO which was supposed to come before September 2019 to meet RBI requirements, but failed to do so. The shares will be listed on exchanges on November 2, 2020. Here’s all about the company and the issue to study before subscribing.

About Equitas Small Finance Bank

Equitas Small Finance Bank Ltd (ESFBL) is Chennai based largest small finance bank in India considering banking outlets and also the 2nd largest small finance bank considering assets under management and total deposits in FY2019 (Source: CRISIL Report).

The Company offers a wide range of banking products and services to customers and focus is on serving the financially unserved and underserved customer segments in India.

The company provides microfinance loans promoting financial inclusion, housing finance, vehicle finance, and MSE finance. Equitas Small Finance Bank offers financial products according to customers income profile, type of security available and nature of business.

Equitas Small Finance Bank IPO Details

OPENS ON:OCT 20, 2020
CLOSES ON:OCT 22, 2020
Price band:Rs. 32 – Rs. 33
Lot size:450 shares
1 lot costing:Rs. 14,850
Listing on:NSE, BSE
Issue size: Rs. 517.6 cr (Fresh issue:Rs. 280 cr + Offer For Sale: Rs. 237.6 cr)
Offer for sale:7.2 cr equity shares by Equitas Holdings Limited, the holding company of Equitas Small Finance Bank
Shareholding:Promoter holding will stand at 82.05% post-issue
Will list on exchange on Nov 2, 2020.

Use of funds:
To augment the Bank’s Tier I capital base to meet the future capital requirement.

Interesting facts about Equitas Small Finance Bank IPO:

  • The promoter of the bank is Equitas Holdings Limited, which is a listed entity.
  • This IPO is to meet the RBI’s regulatory norms that needs the banking subsidiary to be listed within 3 years of commencement of operations.
  • Equitas holding has to reduce promoter stake to 40% within 5 years i.e. by September 2021. The promoter-holdings have to be reduced further to 30% by September 2026 and to 26% by September 2028, which would imply further dilution.
  • Bank’s widespread and stable retail deposit base enables them to access low cost funding, as reflected in their cost of funds, which was 8.36% in 2018 came down to 7.63% in Q1FY2021.
  • Company has witnessed a huge jump in deposits, which has grown at a CAGR of 38.75% in the last two years.
  • As of June 30, 2020, our distribution channels comprised 856 Banking Outlets and 322 ATMs across 17 states and union territories in India.
  • Due to COVID-19, the Bank has experienced and may continue to experience a significant decline in collections as a significant proportion of its collections is cash-based, decline in disbursements due to reduced economic activity, significant increase in the NPA levels due to possible deterioration in the credit quality of its customers.
  • The IPO was earlier planned to be of Rs. 1,000 cr but the bank later reduced the size due to comfortable capital adequacy ratio and also on account of the present market conditions.

Marwadi Shares & Finance Ltd have a ‘SUBSCRIBE’ recommendation for Equitas Small Finance Bank Ltd IPO . To apply for Equitas Small Finance Bank IPO you can do it from our website Marwadi Shares & Finance Ltd.

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