ESAF Small Finance Bank is coming up with an IPO aggregating to INR 463 crores. The offer consists of an offer for sale of INR 72.30 crores and fresh issue of INR 390.70 crores. The bank intends to utilize the funds towards augmentation of the bank’s Tier-I capital base to meet the Bank’s future capital requirements, and for increasing business of the bank.
ESAF Small Finance Bank IPO – Important Details
| ESAF Small Finance Bank IPO Date | November 3, 2023 to November 7, 2023 |
| ESAF Small Finance Bank IPO Listing Date | November 10, 2023 |
| ESAF Small Finance Bank IPO Price | INR 57-60 per share |
| ESAF Small Finance Bank IPO Lot Size | 250 Shares |
| ESAF Small Finance Bank IPO Total Issue Size | INR 463 crores |
| ESAF Small Finance Bank IPO Basis of Allotment | November 10, 2023 |
| ESAF Small Finance Bank IPO Initiation of Refunds | November 13, 2023 |
| ESAF Small Finance Bank IPO Credit of Shares to Demat | November 15, 2023 |
| ESAF Small Finance Bank IPO Issue Type | Book Built Issue IPO |
| ESAF Small Finance Bank IPO Listing At | BSE, NSE |
ESAF Small Finance Bank IPO – Company Profile
ESAF is a small finance bank focusing on unbanked and under-banked customer segments, especially in rural and semi-urban centers. As of June 30, 2023, the gross advances to the customers in rural and semi-urban centers (combined) accounted for 62.97% of the gross advances, and 71.71% of its banking outlets were located in rural and semi-urban centers.
The advances comprise (a) Micro Loans, which comprise Microfinance Loans and Other Micro Loans; (b) retail loans, which include gold loans, mortgages, personal loans, and vehicle loans; (c) MSME loans; (d) loans to financial institutions; and (e) agricultural loans.
The bank has a network of 700 banking outlets (including 59 business correspondent-operated banking outlets), 767 customer service centers (which are operated by the company’s 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.
ESAF Small Finance Bank IPO – Fundamental Analysis
ESAF Small Finance Bank has experienced growth in revenue, equity, and profitability over the three-year period. The 2023 financials show a significant increase in revenue, profit, and return on net worth, indicating strong performance. However, it’s important to consider the industry and external factors that might have influenced these financial results.
- Revenue Growth: The company has shown consistent revenue growth over the three-year period, with a significant increase in revenue from 2022 to 2023.
- Profit accumulation: Equity has increased each year, indicating that the company has been accumulating more capital through various means, such as retained earnings or additional investments.
- Profitability: The company’s profitability has improved significantly. The profit after tax increased from ₹3,609.75 million in 2022 to ₹6,238.29 million in 2023.
- Return on Net Worth (RoNW): While the RoNW for 2022 is 3.89% and 17.69% in 2023. The return on net worth has fluctuated but showed a significant improvement in 2023, which indicates improved profitability relative to equity.
- Earnings per Share (EPS): ESAF Small Finance Banks’ diluted EPS has shown a significant increase in 2023, indicating higher earnings per share.It grew from ₹1.22 in 2022 to ₹6.71 in 2023.
- Net Asset Value (NAV) per Equity Share: The NAV per Equity Share has been consistently increasing, indicating that the net value of each share is growing, which is a positive sign for investors.
- Diluted Earnings Per Share (EPS): Diluted EPS has significantly increased from ₹2.46 in 2021 to ₹6.71 in 2023. This suggests improved profitability per share.
- Total Assets and Total Liabilities: Both total assets and liabilities have increased over the years. This indicates the bank’s expansion but also a growing financial burden. It’s important to ensure that assets continue to exceed liabilities.
- Return on Assets (ROA): ROA has been relatively low but improved from 0.96% in 2021 to 1.63% in 2023, indicating that the bank is generating a better return on its assets.
ESAF Small Finance Bank IPO Financial Information
| Particular | As at 31 March 2021 | As at 31 March 2022 | As at 31 March 2023 |
| Revenue (₹ in Million) | 16,411.73 | 19,399.25 | 28,536.59 |
| Equity (₹ in Million) | 13,520.64 | 14,116.02 | 17,150.04 |
| Expenses (₹ in Million) | 16,630.25 | 20,927.76 | 28,392.39 |
| Profit and Loss After Tax (₹ in Million) | 3,325.92 | 3,609.75 | 6,238.29 |
| RoNW (%) | 7.80% | 3.89% | 17.69% |
| NAV per Equity Share (₹) | 30.08 | 31.03 | 38.03 |
| Diluted EPS only (₹) | 2.46 | 1.22 | 6.71 |
| Total Assets (in million) | 1,23,386.52 | 1,77,075.64 | 2,02,236.57 |
| Total Liabilities (in million) | 1,09,865.88 | 1,62,959.62 | 1,85,086.53 |
| Return on Asset (%) | 0.96% | 0.38% | 1.63% |
ESAF Small Finance Bank IPO Peer Comparison
ESAF Small Finance Bank, with ₹31,415.72 million in revenue and a robust RoNW of 17.69%, shows strong financial performance. Among peers, Credit Access Grameen leads with a high P/E ratio of 26.81, while Spandana Sphoorty lags with the lowest RoNW of 0.40%. Ujjivan Small Finance Bank demonstrates a strong P/E of 9.81 and a high RoNW of 26.45%.
| Company | Total revenue from operations (₹ in million) | Face Value per Equity Share (₹) | P/E | EPS (Basic) (₹) | EPS (Diluted) (₹) | RoNW (%) | NAV per Equity Share (Basic) (₹) |
| ESAF Small Finance Bank Limited | 31,415.72 | 10 | NA | 6.73 | 6.71 | 17.69% | 38.03 |
| Suryoday Small Finance Bank Limited | 12,811.00 | 10 | 22.39 | 7.32 | 7.32 | 4.90% | 149.28 |
| Credit Access Grameen Limited | 35,507.90 | 10 | 26.81 | 52.04 | 51.82 | 16.18% | 326.89 |
| Spandana Sphoorty Financial Limited | 14,770.32 | 10 | 471.38 | 1.74 | 1.74 | 0.40% | 436.58 |
| Bandhan Bank Limited | 183,732.50 | 10 | 16.55 | 13.62 | 13.62 | 11.21% | 121.58 |
| Ujjivan Small Finance Bank Limited | 47,541.90 | 10 | 9.81 | 5.88 | 5.87 | 26.45% | 21.27 |
| Equitas Small Finance Bank Limited | 48,314.64 | 10 | 21.51 | 4.71 | 4.67 | 11.12% | 46.44 |
ESAF Small Finance Bank IPO Objective
ESAF Small Finance Bank proposes to utilize the Net proceeds from the Fresh Issue towards augmenting the Bank’s Tier–I capital base to meet the bank’s future capital requirements and to increase the bank’s business, which is primarily onward lending. Further, the proceeds from the fresh issue will also be used towards meeting the expenses in relation to the Offer.
ESAF Small Finance Bank IPO Risks And Challenges
ESAF Small Finance Bank faces substantial risks, with many unsecured advances. Its dependence on South India, especially Kerala and Tamil Nadu, for both advances and deposits makes it susceptible to regional economic instability.
Moreover, heavy reliance on business correspondents, ESMACO and Lahanti, for a substantial share of advances exposes the bank to potential competition-related issues. It’s essential for the bank to manage these risks to ensure its long-term sustainability carefully.
- As of 30th June 2023, 75.15% of the advances are unsecured. If the bank cannot recover such advances promptly, the financial condition, results of operations, and cash flows may be adversely affected.
- The bank’s business is concentrated in South India, especially in Kerala and Tamil Nadu. As of June 30, 2023, almost 65% of the advances are from Kerala and Tamil Nadu. Also, 80% of the deposits are from the state of Kerala. Any adverse change in the economy of South India, particularly in the states of Kerala and Tamil Nadu, could have an adverse effect on our financial condition, results of operations, and cash flows.
- The bank’s business correspondents -ESAF Swasraya Multi-State Agro Co-operative Society Limited (ESMACO), a Promoter Group and Group Entity, and Lahanti Lastmile Services Private Limited (Lahanti), a Group Entity) sourced or serviced 74.75% of the gross advances as at June 30, 2023. If any of the business correspondents prefer to promote the loans of the competitors’ loans over the bank’s loans, it would adversely affect the business, financial condition, results of operations, and cash flows.
ESAF Small Finance Bank Limited IPO – Industry & Market Potential
Credit to metropolitan centers has decreased over the past few years, with its share decreasing from 66% as of March 31, 2018, to 62% as of June 30, 2023. During the same period, credit share has witnessed a marginal rise in rural and urban centers. For semi-urban centers, credit share has gone up from 12% as of March 31, 2018, to 13% as of June 30, 2023.
Due to the COVID-19 pandemic, demand for credit reduced drastically on account of economic activity coming down to a standstill due to the lockdown led sharp fall in disbursements. However, there was a pickup in disbursements since the second half of Fiscal 2022, a trend that continued in Fiscal 2023. The bank credit demand was broad-based in Fiscal 2023, growing at 15% yearly. There was strong retail credit demand from segments like personal loans, consumer durables, credit cards, vehicle loans, etc.
ESAF Small Finance Bank Limited IPO – Type of Offer
ESAF Small Finance Bank plans to raise INR 390.70 Crore through a fresh issue of new shares to strengthen its Tier-I capital base and support future capital needs. Additionally, existing shareholders will sell INR 72.30 Crore worth of their stakes through an Offer For Sale (OFS) process.
Fresh Issue: The company will issue new shares to raise capital, aiming to collect INR 390.70 Crore. This fund will be utilized towards augmenting the Bank’s Tier–I capital base to meet the bank’s future capital requirements and for increasing the Bank’s business.
Offer For Sale (OFS): Existing shareholders will sell a portion of their stake in the company worth INR 72.30 crores.
ESAF Small Finance Bank Limited IPO Offer Size
ESAF Small Finance Bank is launching an IPO with a total of INR 463 crores. This IPO includes an offer for sale amounting to INR 72.30 crores and a fresh issue worth INR 390.70 crores. The bank plans to use these funds to bolster its Tier-I capital base, meet future capital needs, and to expand its business operations.
ESAF Small Finance Bank Ltd IPO Allotment Structure
ESAF Small Finance Banks’’ IPO allocation designates 50% for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for Retail Individual Investors (RIIs) in line with SEBI regulations.
● Qualified Institutional Buyers (QIB): As per SEBI regulations, 50% of the shares offered through the IPO will be reserved for Qualified Institutional Buyers. These include entities such as banks, mutual funds, and insurance companies.
● Non-Institutional Investors (NII): 15% of the shares will be reserved for Non-Institutional Investors. These typically include corporate bodies or individuals investing more than Rs. 2 lakhs.
● Retail Individual Investors (RII): The remaining 35% of the shares will be allotted to Retail Individual Investors. These individual investors apply for shares with a total value of less than Rs. 2 lakhs.
How to apply for an ESAF Small Finance Bank Ltd IPO?
To apply for the ESAF Small Finance Bank IPO through Alice Blue, you would typically follow these steps:
1. Open a Demat and Trading Account: If you don’t already have one, you need to open a Demat and trading account with Alice Blue.
2. Check for IPO Details: Once your account is active, you can check for the ESAF Small Finance Bank IPO details in the IPO section of the Alice Blue platform.
3. Place the Bid: Enter the number of shares you wish to buy and place your bid within the IPO’s price band.
4. Submit the Application: Confirm all your details and submit your application.
You can apply for ESAF Small Finance Bank Limited IPO at Alice Blue in just a few clicks!
Check Allotment Status: Post the allotment process, you can check the allotment status to see if you have received any shares.
Please note that the allotment of shares is not guaranteed and will depend on the demand for the IPO.
How to Check ESAF Small Finance Bank IPO Allotment Status on Alice Blue?
Checking the allotment status of an IPO in Alice Blue is usually straightforward. Please follow these general steps:
1. Log in to your Alice Blue Account: You can do this through the Alice Blue website or their trading app.
2. Navigate to the Portfolio or IPO Section: This might differ based on the layout of Alice Blue’s platform, but generally, you can find the status of your IPO application under the ‘Portfolio’ or ‘IPO’ section.
3. Find the IPO Allotment Status: Look for a sub-section called ‘IPO Allotment Status’ or something similar. This is where you can see the status of the IPOs you have applied for.
4. Select the ESAF Small Finance Bank IPO: If you have applied for multiple IPOs, there might be a dropdown menu or a list where you can select the IPO you are interested in. Select the ESAF Small Finance Bank IPO.
5. Check the Status: The status of your application should be displayed here. If the shares have been allocated to you, it would be mentioned here.
If you face any issues, it’s recommended to contact Alice Blue’s customer support for detailed assistance.
Apart from Alice Blue, there are other ways to check the allotment status of the ESAF Small Finance Bank IPO:
Registrar’s Website: Visit the website of Link Intime India Private Limited, the registrar of the ESAF Small Finance Bank IPO. On the homepage, look for the ‘IPO Allotment Status’ option. You must enter your PAN, application, or Demat account number to check your allotment status. Click on the ‘Submit’ button to view your IPO allotment status.
NSE and BSE: You can also check the allotment status on the official websites of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). You would need your application number and PAN to check the status.
Please note that the allotment status will only be available after the allotment process has been completed, a few days after the IPO window closes.
ESAF Small Finance Bank IPO Offer Registrar
The registrar for the ESAF Small Finance Bank IPO is Link Intime India Private Limited. They are responsible for ensuring the IPO allotment and refund processes are carried out smoothly.
Contact information for the registrar:
Link Intime India Private Limited
C-101, 1st Floor, 247 Park
L.B.S. Marg, Vikhroli West
Mumbai – 400 083, Maharashtra
Phone: 022-4918 6200
Email: [email protected]
Website: www.linkintime.co.in
ESAF Small Finance Bank IPO – FAQs
The allotment date is November 10, 2023.
The price band of the issue is INR 57-60 per share.
ESAF Small Finance Bank is launching an IPO with INR 463 crores. This IPO includes an offer for sale amounting to INR 72.30 crores and a fresh issue worth INR 390.70 crores. The bank plans to use these funds to bolster its Tier-I capital base, meet future capital needs, and expand its business operations.
The listing date is November 10, 2023.
