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Varanasi-based Utkarsh Small Finance Bank Ltd recorded the third fastest Gross Loan Portfolio growth between Fiscal 2019 and Fiscal 2023 among SFBs with AUM of more than Rs 6,000 crore has received bids of 57,07,21,800 shares against the offered 12,05,43,477 equity shares, at a price band of ?23-25, according to the data available on the stock exchanges.  

All investor categories showed a lot interest in the offer, and as a result, the issue was fully subscribed within two hours of bidding, resulting in an overall subscription to 4.73 times on the first day of bidding. 

Retail Portion was the most subscribed with a subscription of 13.75 times, followed by Non-Institutional Investors Portion was subscribed 8.25 times. Employee Portion with a subscription of 2.73 times, whereas, Qualified Institutional Buyer Portion was subscribed 0.04 times. The issue kicked off for subscription on Wednesday, July 12, 2023 and will close on Friday, July 14, 2023. 

A day prior to the Issue opening, Utkarsh Small Finance Bank Ltd had raised Rs 223 crore from anchor investors. Foreign Investors and Domestic Institutions who participated in the anchor were SBI Mutual Fund, ICICI Prudential Banking and Financial Services, Kotak Mutual Fund, Aditya Birla Sun Life Mutual Fund, Mirae Asset Mutual Fund, Goldman Sachs, Massachusetts Institute of Technology, ICICI Prudential Life Insurance, SBI Life Insurance, and Edelweiss Mutual Fund. 

Broking houses like Nirmal Bang, Anand Rathi, SBI Securities, Geojit Financial Services, LKP Securities, Reliance Securities, Hensex Securities, Swastika Investmart, Ashika Research, BP Equities (StoxBox) and Marwadi Financial Services have given a “SUBSCRIBE” rating to the issue. 

The said brokerages unanimously recommend subscribing to the IPO due to its favorable valuation, stable growth, improved asset quality, cost efficiency, diversified product offerings, increasing financial performance, and positive industry outlook. 

Firstly, Utkarsh SFB is considered fairly priced compared to its peers and has a stable growth trajectory. It has a diversified distribution network and significant cross-selling opportunities. Additionally, the bank has reduced its exposure to the unsecured micro-banking segment, which has de-risked its business model. Utkarsh SFB has also outperformed its peers in terms of loan growth, return ratios, and asset quality. Furthermore, it is available at a reasonable valuation, considering the positive industry outlook and the bank's resilient performance. The brokerages believe that Utkarsh SFB is well-positioned to benefit from the growth of the Small Finance Bank sector and offers a good investment opportunity for both short to medium-term gains and long-term investment. 

ICICI Securities Limited and Kotak Mahindra Capital Company Limited are the book running lead managers, while KFin Technologies Limited is the Registrar to the Issue.  

Company Information 

The Bank is promoted by Utkarsh CoreInvest Limited, which commenced its operations as a NBFC in Fiscal 2010 and focused on providing microfinance to unserved and underserved segments particularly in the states of Uttar Pradesh and Bihar. Utkarsh CoreInvest Limited received the RBI In-Principle Approval on October 7, 2015, to establish an SFB, following which it incorporated Utkarsh Small Finance Bank Limited as a wholly-owned subsidiary on April 30, 2016. Subsequent to the Bank obtaining the RBI Licence on November 25, 2016, to establish and carry-on business as an SFB, Utkarsh CoreInvest Limited transferred its business of providing microfinance, as a going concern to the Bank, which commenced its operations from January 23, 2017. 

The bank operates throughout India and has a presence in 26 states and Union Territories, with 830 banking outlets and 15,424 employees as of March 31, 2023. Its primary focus is on rural and semi-urban areas. As of the same date, the bank serves a customer base of 3.59 million, encompassing both deposit and credit customers, predominantly located in rural and semi-urban areas, with Bihar and Uttar Pradesh accounting for 30.88% and 25.98% of its total Gross Loan Portfolio respectively, based on the location of the banking outlets 

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