Utkarsh Microfinance Bank IPO open for offering on 12thth July 2023. From 2019 to 2023, the amount of lending increased significantly, making it the third fastest growing bank compared to its peers. Utkarsh microfinance is priced between Rs.23 and Rs.25, which investors may consider low. In this article Utkarsh Microfinance Bank IPO Details, financials, IPO objectives, ratings, reviews, conclusions.
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Utkarsh Microfinance Bank IPO Details
we used Utkarsh Microfinance Bank RHP As source data for this review and analysis. Click here for details of the IPO.
| IPO start date | July 12, 2023 |
| IPO deadline | July 14, 2023 |
| IPO Listing Date | July 24, 2023 |
| Kind of problem | Book Built Issue IPO |
| face value | 10 rupees per share |
| IPO price range | Rs.23 to Rs.25 per share |
| lot size | 600 shares |
| Minimum order quantity | 600 shares |
| exhibition place | BSE and NSE |
| total issue size | Rs.500 million |
| Offer of QIB shares | 75% or more of the offer |
| Offer of NII/HNI shares | No more than 15% of the offer |
| retail shares sold | No more than 10% of the offer |
About Utkarsch Small Finance Bank Limited
Small Financing Bank (SFB) in India, which has achieved impressive growth in total loan portfolio from FY2019 to FY2023, ranking 3rd among SFBs with a portfolio of over INR 600 crore.
The bank’s promoter, Utkarsh Coreinvest Limited, started in 2010 as a non-bank financial company (NBFC) specializing in microfinance, targeting underserved areas of Uttar Pradesh and Bihar. provided the service. Headquartered in Varanasi, Uttar Pradesh, the bank is strategically expanding its SFB operations in states where Utkarsh Coreinvest has previous microfinance experience. The bank obtained an RBI license in 2016, allowing it to be established and operated as an SFB.
As of March 31, 2023, Utkarş SFB operates in 26 states and federal territories, has 830 bank branches and 15,424 employees. Most of the company’s bank branches are located in rural and semi-urban areas, exceeding the regulatory requirement of 25% for SFB. With a customer base of 3.59 million, the bank is particularly focused on rural and semi-urban areas of Bihar and Uttar Pradesh, where it has excellent asset quality and moderate credit penetration. .
To reduce its reliance on microfinance, Utkarş SFB has diversified its product portfolio to include non-microbanking loans. The Bank offers a variety of financial products and services tailored to different customer segments, including microbanking loans, retail loans, wholesale loans, home loans, commercial vehicle loans and gold loans. On the liability side, we offer savings accounts, checking accounts, different types of fixed and fixed deposit accounts. The bank also offers non-credit services such as ATM and debit cards, bill payment systems, and third-party product sales.
Utkarsh Microfinance Bank Limited Finance
Here is the financial situation of the company.
To summarize the above, while the company’s total assets and total revenue have increased steadily, after-tax profit temporarily decreased, but recovered last year and achieved high profit.
| Fiscal year end/end (amounts in billions) | ||||
| detail | 2020 | 21st year | 22nd year | 23rd year |
|---|---|---|---|---|
| Total assets | 9,404.3 | 12,137.9 | 15,063.8 | 19,117.5 |
| gross income | 1,406.2 | 1,705.8 | 2,033.7 | 2,804.3 |
| Profit after tax | 186.7 | 111.8 | 61.5 | 404.5 |
| Profit % | 13.28% | 6.56% | 3.02% | 14.42% |
What is the purpose of the IPO?
Banks are proposing to use the net proceeds from the issuance to strengthen their Tier-1 capital base to meet future capital requirements. In addition, the proceeds from this issuance will be used for various expenses.
Utkarsh Microfinance Bank’s IPO Promoter’s ownership will decrease from 84.75% to 69.28% after listing.
What is your assessment of the Utkarsh Small Finance Bank IPO price?
IPO price ranges from Rs.23 to Rs.25 per share.
- Moreover, the PER is 6x when considering last year’s 2023 EPS of Rs 4.51.
- Similarly, considering the weighted EPS of Rs 2.73 over the last 3 years, the PER is 9x.
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Furthermore, it is important to note that Spandana Sporthy Financial Limited has the highest P/E ratio among its listed peers at 400x, while Ujjivan Small Finance Bank Limited has the lowest P/E ratio at 7x. The industry average PER is also 7 times. Therefore, considering the IPO price range of PER 6 times to 9 times, it can be said that it is a reasonable price.
What is the IPO GMP of Utkarsh Small Finance Bank now?
There are many messages circulating on social media claiming that the gray market premium is between 25 and 30 rupees, almost 100% premium. However, credible sources report that today’s GMP is between Rs 4 and 5 per share.
What is the IPO date of Utkarsh Microfinance Bank?
| IPO start date | Wednesday, July 12, 2023 |
| IPO closes on | Friday, July 14, 2023 |
| Basis for allocation | Wednesday, July 19, 2023 |
| Initiate refund | Thursday, July 20, 2023 |
| Credit of shares to Demat | Friday, July 21, 2023 |
| Listing date | Monday, July 24, 2023 |
| UPI Obligation Verification Deadline Time | July 14, 2023 at 5:00 PM |
Positive Factors for Utkarsh Microfinance Bank IPO Investment
1) The company fully understands the microfinance sector and its presence in rural and semi-urban areas.
2) The company has significantly increased the amount of deposits, mainly for individual deposits. Its deposit increased from Rs 75,058 million as of March 2021 to Rs 137,101 million as of March 2023.
3) This microfinance bank has a diverse distribution network with great cross-selling opportunities. They have an extensive physical network of bank branches and as of 31 March 2023, they have 830 bank branches in 26 states and union territories covering 253 districts of India, of which 522 Bank branches are located in rural and semi-urban areas (total).
4) The company has experienced significant revenue growth over the past four years. Revenue increased from INR 1.46 billion in FY20 to INR 2.84 billion in FY2023.
5) The IPO price is reasonable compared to other companies in the same industry.
Risks or downsides in the IPO of Utkarsh Microfinance Bank
1) Bank margins fell in FY2020-22, but improved in FY23. It will be necessary to pay attention to whether this improvement in profit margins will continue in the future.
2) Company is subject to scrutiny by regulatory authorities including RBI. Failure to comply with RBI inspections or observations may adversely affect a company’s business.
3) RBI has banned former statutory auditors of banks from performing audit duties for two years.
4) A significant portion of the bank’s progress in the micro-banking sector has been made for customers in Bihar and Uttar Pradesh. Any adverse change in these two states could affect the bank’s business.
5) The Company has filed a settlement application with SEBI for delays in providing certain disclosures regarding the NCD Listing.
6) Bank deposits are from a limited number of customers. Losing such a customer would have a significant impact and could impact its deposit portfolio.
7) High percentage of bulk deposits. Any partial or full withdrawal of deposits from such customers could adversely affect their business.
Utkarsh Microfinance Bank IPO Review – Conclusion
Is Utkarsch Microfinance Bank IPO good or bad for investment?
This IPO has both positives and negatives for investors to consider.
The company is the fastest growing microfinance bank in terms of assets under management in recent years. Its deposits increased significantly from FY2020 to FY23. Utkarsh Microfinance Bank Continued Loan Growth. We see all these positive factors reflecting strong revenue growth from fiscal 2020 to his fiscal 2023. The issue price is affordable and the gray market premium also shows a premium of 20-30%.
On the other hand, corporate profit margins declined from FY2020 to FY2022, but improved in FY2023. It will be necessary to pay close attention to whether this improvement in profit margins will continue in the future. Customers in Bihar and Uttar Pradesh account for a significant portion of the prepayments, with limited customers in Maharashtra, Delhi’s NCT, UP and Haryana contributing the majority of deposits. RHP shows network diversification, but remains limited
High-risk investors who understand all these risk factors can invest in this IPO with a medium- to long-term perspective.
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Utkarsh Microfinance Bank IPO FAQ
When is Utkarsh Microfinance Bank IPO start date?
The IPO will start on July 12, 2023 and close on July 14, 2023.
What is Utkarsch Microfinance Bank ipo gmp today?
GMP is trading between Rs 4 and 5 per share.
Is Utkarsh Microfinance Bank IPO Price High?
Considering the IPO price P/E is between 6x and 9x, the IPO price is reasonable.
What is the IPO size of Utkarsh Microfinance Bank?
This IPO size is Rs 500 crore and is a brand new issue.
