IPO Analysis : Suryoday Small Finance Bank Ltd

 IPO Analysis : Suryoday Small Finance Bank Ltd.

Suryoday Small Finance Bank Limited is among the leading SFBs in India in terms of net interest margins, return on assets, yields and deposit growth and had the lowest cost-to-income ratio among SFBs in India in Fiscal 2020. 

They have for over a decade been serving customers in the un-banked and under banked segments in India and promoting financial inclusion. Pursuant to receipt of the RBI Final Approval, they started operations as an SFB on January 23, 2017. Prior to commencement of operations as an SFB, they operated as an NBFC – MFI carrying out microfinance operations and operated the joint liability group-lending model for providing collateral-free, small ticket-size loans to economically active women belonging to weaker sections. Their average “priority sector” loans, as a percentage of average ANBC for Fiscal 2018, 2019 and 2020 was 99.08%, 112.10% and 103.67%, respectively. Over the years, they have diversified its loan portfolio to include non-micro banking loans thereby reducing their dependence on micro banking business.

The Bank commenced its microfinance operations in 2009 and has since expanded their operations across 12 states and union territories, as of July 31, 2020. As of July 31, 2020, their customer base was 1.43 million and their employee base comprised 3,949 employees and they operated 482 Banking Outlets including 137 Un-banked Rural Centers.

What this Company Offers? 

• Offer credit products like MFI loans, Vikas Loans, Shopkeeper Loans, etc.
• Offer digital banking, NPCI payment systems, and mobile technologies along with banking through traditional channels.
• Focus on the un served and the under served through innovative banking practices.
• Offers diversified asset portfolio with a focus on retail operations.

Brief Financial Details (in Rs Cr):

Objective of the issue:

The Bank proposes to utilize the Net Proceeds from the Fresh Issue towards augmenting the Bank's Tier-1 capital base to meet the Bank's future capital requirements.

Important Dates to Remember:

Verdict:

In my view, valuations are costly. Some quantity of this company is pledged. In my view one can avoid this IPO. We can get good entry levels after listing.

Sources: Various publications

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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