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ESAF SMALL FINANCE BANK LTD IPO

IPO Details

-
-
250 Shares
₹ 15,000
₹ 57 – 60
₹ Up to 463 Cr

Issue timeline

  • -
  • 10-Nov-2023
  • 13-Nov-2023
  • 15-Nov-2023
  • 16-Nov-2023

Subscription Status

Shareholder -
Qualified Institutional Buyers -
Non-Institutional Investor -
Retail Individual Investor -
Employee -
Total -

About Company

- A small finance bank with a focus on unbanked and under-banked customer segments, especially in rural and semi-urban centres. (Source: Company RHP)

-Their primary products are advances (asset products) and deposits (liability products).

- They have a network of 700 banking outlets, 767 customer service centres 22 business correspondents, 2,116 banking agents, 525 business facilitators and 559 ATMs spread across 21 states and two union territories as at June 30, 2023. (Source: Company RHP).

Strengths & Risks

Strengths (3)

Growing Retail Deposits portfolio
They have placed an emphasis on increasing Retail Deposits. Their Retail Deposits increased from ₹87,963.84 million as at March 31, 2021 to ₹133,230.03 million as at March 31, 2023, representing a CAGR of 23.07%, and further increased to ₹139,772.67 million as at June 30, 2023, an increase of 4.91%. (Source: Company RHP)

Risks (2)

They may face asset liability mismatches, which could affect their liquidity.
They face liquidity risks due to mismatches in the maturity of assets and liabilities. Although they have implemented procedures and policies that are designed to mitigate liquidity risks, if they are unable to obtain additional borrowings or renew existing credit facilities for matching tenures of loan portfolio in a timely and cost-effective manner or at all, it may lead to mismatches between assets and liabilities, which could adversely affect their financial condition (Source: Company DRHP)

  • Growing Retail Deposits portfolio
    They have placed an emphasis on increasing Retail Deposits. Their Retail Deposits increased from ₹87,963.84 million as at March 31, 2021 to ₹133,230.03 million as at March 31, 2023, representing a CAGR of 23.07%, and further increased to ₹139,772.67 million as at June 30, 2023, an increase of 4.91%. (Source: Company RHP)

  • Technology-driven model with a digital technology platform
    They offer their customers various digital platforms, including an internet banking portal, a mobile banking platform, SMS alerts, bill payments and RuPay branded ATM cum debit cards. All banking and payment transactions, such as remittances and utility payments, can be completed through these platforms. Their account opening and loan underwriting processes have been digitalised by using tablets, which enabled them to reduce turnaround time and offer better service to customers (Source: Company RHP)

  • Experienced Board and Key Managerial Personnel and Senior Management Personnel
    They have an experienced Board comprising members with diverse business experience, many of whom have held senior positions in well-known financial services institutions. The members of their Senior Management Personnel have expertise in scaling up financial services organizations and collectively they have all the relevant experience in credit evaluation, risk management, treasury and technology (Source: Company RHP)

  • They may face asset liability mismatches, which could affect their liquidity.
    They face liquidity risks due to mismatches in the maturity of assets and liabilities. Although they have implemented procedures and policies that are designed to mitigate liquidity risks, if they are unable to obtain additional borrowings or renew existing credit facilities for matching tenures of loan portfolio in a timely and cost-effective manner or at all, it may lead to mismatches between assets and liabilities, which could adversely affect their financial condition (Source: Company DRHP)

  • The Indian finance industry is intensely competitive
    They face intense competition in all principal products and services. The RBI has awarded in-principle SFB licences to 12 applicants as of March 31, 2023 including them. (Source: CRISIL MI&A Report). Their competitors in the organized sector may have a better brand recognition, greater business experience, more diversified operations, a greater customer and depositor base, a larger branch network and better access to funding and at lower costs than they do.(Source: Company DRHP)

Financials

Net Worth
Total Income
Total Borrowings
Net Profit
Earnings Per Share

Industry Overview

- Rural India – Under penetration and untapped market presents a huge opportunity for growth  : Credit to metropolitan centres has decreased over the past few years with its share decreasing from 66% as at March 31, 2018 to 62% as at June 30, 2023. As at March 31, 2023, rural centres, which accounted for 47% of GDP, received just 8% of the overall banking credit, which shows the vast market opportunity for banks and NBFCs to lend in these centres.  (Source: Company RHP)


- Bank credit to move marginally faster than systemic credit :  Over the past decade, banking credit growth lagged systemic credit growth for several years as NBFCs grew at a much faster pace. Going forward, credit to the overall retail segment is expected to lead the growth of the banking sector, supported by healthy growth in housing, consumer durable, gold and other personal loans segments. CRISIL MI&A expects bank credit to grow at 12-14% CAGR between Fiscal 2023 and Fiscal 2025.(Source: Company DRHP)

vishal-mega-mart IPO

ESAF Small Finance Bank Ltd IPO

₹ 15,000
250 Shares

Subscription Status

Shareholder -
Qualified Institutional Buyers -
Non-Institutional Investor -
Retail Individual Investor -
Employee -
Total -

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*The financials mentioned above are sourced from DRHP/ RHP documents.

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