Brokerages Gung-Ho Over Medium-To-Long-Term Investment

ESAF Small Finance Bank is the fifth largest SFB in terms of assets under management.

MUMBAI, Nov 6 (the CONNECT) – The Rs 463 crore Initial Public Offering of ESAF Small Finance Bank Limited was subscribed 8.3 times on the second day of bidding.

ESAF Small Finance Bank, focused on unbanked and under-banked customers, is the fifth largest SFB in India in terms of assets under management (AUM). It reported the second highest year-on-year AUM growth for three months ended Fiscal 2024 among compared SFBs.

The issue, at a price band of ₹57-60, received bids of 48,03,04,500 shares against the offered 5,77,28,408 equity shares, according to the data available on the stock exchanges.

Non-Institutional Investors Portion was the most subscribed with 20.18 times, followed by Retail with 7.91 times, whereas Qualified Institutional Buyer segment subscribed 1.04 times and that of employees subscribed 2.4 times. The issue kicked off for subscription on Friday, November 3, 2023 and will close tomorrow.

A day prior to the opening of the issue, ESAF Small Finance Bank Ltd had raised Rs 135.15 crores from anchor investors. Foreign and Domestic Institutions who participated in the anchor were ACM Global Fund VCC, Kotak Mahindra Life Insurance Company Limited, Edelweiss Tokio Life Insurance Company Limited, ICICI Prudential Life Insurance Company Limited, SBI General Insurance Company Limited, Founder Collective Fund, Ananta Capital Ventures Fund 1, Astorne Capital VCC – Arven, BNP Paribas Arbitrage, Copthall Mauritius Investment Limited, Alchemie Ventures Fund – Scheme 1.

Leading brokerages like Motilal Oswal, Anand Rathi, SBI Securities, Nirmal Bang, Geojit Financial Services, LKP Securities, Sushil Finance, Indsec Securities, Hem Securities, Swastika Investmart, StoxBox, BP Equities, and Religare Broking have given a “SUBSCRIBE” rating to the issue, highlighting the bank’s attractive valuation, strong return ratios, and its potential to tap into the rural segment’s untapped credit opportunities.

While some concerns, such as geographic concentration and intense competition, exist, the overall sentiment is favourable. The IPO is generally seen as worth considering, with recommendations to subscribe, especially for medium- to long-term investors.

ICICI Securities Limited, DAM Capital Advisors Limited, and Nuvama Wealth Management Limited (formerly known as Edelweiss Securities Limited) are the book-running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.

ESAF has a network of 700 banking outlets (including 59 business correspondent-operated banking outlets), 767 customer service centres (operated by its business correspondents), 22 business correspondents, 2,116 banking agents, 525 business facilitators, and 559 ATMs spread across 21 states and two union territories, serving 7.15 million customers as at June 30, 2023.