Home/Blogs/Utkarsh Small Finance Bank IPO: Check Issue Size, Date and Price Band

Utkarsh Small Finance Bank IPO: Check Issue Size, Date and Price Band

ipo
Published Date: 11 Jul 2023Updated Date: 07 Jan 20256 mins readBy MOFSL
Utkarsh Small Finance Bank

Introduction:

Recently, several Initial Public Offerings (IPOs) have been launched in the Indian stock markets. Some of them, including ideaForge Technology and Cyient DLM Limited, attracted heavy bidding from investors, with the former providing around 93% listing gains. Another company – Utkarsh Small Finance Bank – is due to launch its IPO in July 2023.

Utkarsh Small Finance Bank IPO opens for subscription from retail investors on Wednesday, 12 July 2023 and closes on Friday, 14 July 2023. But before you subscribe for this IPO, let’s take a deep dive into the details and determine whether it would be profitable.

Open Demat Account with us to start investing!

About the Utkarsh Small Finance Bank:

Incorporated in 2016, Utkarsh Small Finance Bank started operating in 2017 and catered mostly to unserved people in rural and semi-urban regions of India. The company has a distinct focus on microfinance business. It also offers common banking facilities, such as opening a savings account, current account, recurring accounts, fixed deposits, and locker provisions.

As of 31 March 2023, Utkarsh Small Finance Bank had 3.59 million customers in Uttar Pradesh and Bihar. The company operates across 26 Indian states and Union Territories with 830 branches and 15,424 employees. The company’s headquarter is located in Varanasi, Uttar Pradesh.

Key strengths of Utkarsh Small Finance Bank:

  • Deep expertise in microfinance business
  • The retail deposit business of the company is growing tremendously
  • Diversified distribution network across India with considerable cross-selling
  • Boasts a robust credit assessment and risk management framework
  • Positive growth post-COVID-19 pandemic coupled with cost-effective operations

Risks associated with Utkarsh Small Finance Bank:

  • A significant portion of customers belong to Uttar Pradesh and Bihar
  • The majority of loans given by the company are unsecured
  • Operates in a highly competitive industry
  • Presence of some big competitors including Equitas, Ujjivan, Bandhan Bank, and AU Small Finance Bank
  • Regulated by the Reserve Bank of India’s guidelines
  • Changes in the interest rate can hamper a company’s business

Financials Of Utkarsh Small Finance Bank:

The company boasts a strongly growing revenue portfolio for the last three fiscals. It recorded the third-fastest gross loan portfolio growth among small finance banks in India. After the end of the financial year 2022-23, Utkarsh Small Finance Bank’s loan portfolio stood at around Rs. 60 billion. 

The company's net worth increased to Rs. 2,000 crores on 31 March 2023 from Rs. 1,368 crores on 31 March 2021. The net profit for FY 2023 stood at Rs. 405 crores as against Rs. 61 crores a year ago. The company’s net Non-Performing Assets (NPA) have also improved to 0.39% from 2.31% during this period.

Get ready to invest: Apply in the best Upcoming IPOs now!

The table below reflects the company’s financials as per the preliminary papers filed with the market regular SEBI:

Particulars As of and For FY Ending March 31
2023 2022 2021
Net Worth Rs 2,000 Rs 1,572 Rs 1,368
Gross Loan Portfolio Rs 13,957 Rs 10,631 Rs 8,416
Total Income Rs 2,804 Rs 2,034 Rs 1,706
Net Interest Income Rs 1,529 Rs 1,061 Rs 839
Profit After Tax Rs 405 Rs 61 Rs 112
Net Interest Margins 9.75% 8.75% 8.20%
Net NPA 0.39% 2.31% 1.33%
Earnings Per Share (Diluted) Rs 4.51 Rs 1 Rs 1
 Return on Equity (%) 23% 4% 10%
Return on Average Assets 2.42% 0.48% 1.05%

*Amount in Crores

Details of the IPO:

Utkarsh Small Finance Bank IPO will open for public subscription on 12 July and closes on 14 July. The IPO will be a 100% fresh issue worth Rs. 500 crores. 75% of the issue will be reserved for Qualified Institutional Buyers (QIBs), 15% is reserved for Non-Institutional Buyers (NIBs), and the remaining 10% is reserved for retail investors.

The allotment of shares is expected to be finalised on 19 July, and shares will be credited to investors’ Demat account on 20 July. The company's stocks are expected to be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) on 24 July.

Earlier, the bank had filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in July 2021 to raise Rs. 1,350 crores. However, in August 2022, it filed new draft papers after cutting the issue size by 63% to raise Rs. 500 crores through its IPO. 

With the proceeds from the IPO, the bank plans to augment its Tier I capital base to meet its future capital requirements and carry out general corporate works.

What to Check Before Investing?

Before investing in any IPO, you must analyse a few factors – the financials of the company, its performance in the last three years, Grey Market Premium (GMP), future growth prospects, and the prevailing market conditions. All these parameters paint a positive picture if we talk about the Utkarsh Small Finance IPO. You can take this as a green signal to subscribe for this IPO. However, you need to be wary of the associated risks.

In case you don’t have a Demat account to subscribe for the IPO, you can open it for free with Motilal Oswal.

 

Related Articles: How to Apply for best Upcoming IPO and Check it's Allotment Status | How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application

 

Financial Calculators: SIP Calculator | SWP Calculator | Compound Interest Calculator | EMI Calculator | FD Calculator | Retirement Calculator | Option Value Calculator | Inflation Calculator | Lumpsum Calculator

 

Popular Stocks: ICICI Bank Share Price | HDFC Bank Share Price | CDSL Share Price | UPL Share Price | TCS Share Price | BHEL Share Price | Trident Share Price | IRFC Share Price | Adani Power Share Price

 

You may also like…

Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
Open Demat Account
I wish to talk in South Indian language
By proceeding you’re agree to our T&C
Click here to see your activities