There are some interesting IPOs scheduled to be launched in 2021. One such IPO is the Suryoday Small Finance Bank Limited IPO that is being launched on March 17, 2021. Here is all you need to know about the issue.
|IPO Date||March 17, 2021 to March 19, 2021|
|Issue Type||Book Built Issue IPO|
|Issue Size||19,093,070 Equity Shares of Rs.10 totaling up to Rs.582.34 Crore|
|Fresh Issue||8,150,000 Equity Shares of Rs.10 totaling up to Rs.248.58 Crore|
|Offer for Sale||10,943,070 Equity Shares of Rs.10 totaling up to Rs.333.76 Crore|
|Face Value||Rs.10 per equity share|
|IPO Price||Rs.303 to Rs.305 per equity share|
|Market Lot||49 shares|
|Min Order Quantity||49 shares|
|Listing At||BSE, NSE|
|Bid/Offer Launch date||March 17, 2021|
|Bid/Offer Last date||March 19, 2021|
|Basis of Allotment finalization date||March 24, 2021|
|Initiation of Refunds||March 24, 2021|
|Credit of Shares to Demat Acct||March 25, 2021|
|IPO Shares Listing Date||March 30, 2021|
Suryoday Small Finance Bank Limited is among the leading small finance banks (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. Currently, the bank offers a variety of asset and liability products and services designed for inclusive finance and general banking customers. Its products consist of an inclusive finance portfolio (comprising loans to JLG customers), commercial vehicle loans, affordable housing loans, micro business loans, unsecured micro and small enterprise and small and medium enterprise loans, secured business loans, financial intermediary group loans, and other loans. Since commencing its operations Suryoday Bank has focused on growing a stable, sustainable, and well-penetrated CASA (Current Account Savings Account) base.
In addition to the loan and deposit products, the bank also offers other banking facilities, products, and services to generate non-interest income, and cater to the additional needs of its customers. These facilities, products, and services include debit cards, internet banking, mobile banking, online bill payment services, and the distribution of third-party life and general insurance products, and mutual fund products. Suryoday Small Finance Bank Limited has leveraged the use of technology across all aspects of its operations. In particular, it uses digital technology for customer acquisition and also customer lifecycle management. The employees use tablets to service customers in the unbanked and underbanked segments which it believes has led to greater customer convenience and improved operational efficiency. It also has a robust back-end operating system supported by its core banking system and document management system.
Suryoday Small Finance Bank Limited was originally incorporated as Suryoday Micro Finance Private Limited at Chennai, Tamil Nadu on November 10, 2008. Within one year, it received a license from the Reserve Bank of India (RBI) to establish a non-banking finance company (NBFC) and start microfinance operations. The same year, the bank also received an investment by Aavishkaar Goodwell India Micro Finance Development Company Limited.
Within the next three years, HDFC Holdings Limited and HDFC Standard Life Insurance Company Limited had invested in Suryoday Small Finance Bank Limited too. Over the next two years, the bank had received investments from Lok Capital II LLC and IFC. It also received permission from the Bombay Stock Exchange (BSE) to list in the wholesale segment and start issuing debt securities.
In 2015, it was converted into a public limited company having 159 branches and nearly half a million customers. The same year, it received an investment from DWM (International) Mauritius Ltd and in-principle approval from the RBI to establish a small finance bank (SFB).
In 2016, the RBI gave its final approval to Suryoday Bank to commence its operations as an SFB. It also received a rating of A (-) for its non-convertible debentures by ICRA. Also, in 2016, the bank received investments from IDFC FIRST Bank Limited (previously known as IDFC Bank Limited), Polaris Banyan Holding Private Limited, ASK Pravi Capital Advisors Private Limited, Dr. Aravind Srinivasan, and Kiran Vyapar Limited.
The bank finally started its SFB operations in January 2017 and received more investments by Evolvence India Fund II Ltd, ResponsAbility Participations Mauritius, Jhelum Investment Fund I, Gaja Capital Fund II Limited, TVS Shriram Growth Fund, and New Tech Investments Limited. From 2017 to 2020, the bank has established itself in the small finance space and had 477 branches and around 1.5 million customers by March 31, 2020.
Here is a quick look at the financial performance of Suryoday Small Finance Bank Limited over the last three years:
|Mar 2020||Mar 2019||Mar 2018|
|Profit After Tax||111.20||90.40||11.49|
All amounts in INR Crore
A quick glance at the financial performance of Suryoday Small Finance Bank over the last 3 years offers the following insights:
In India, the small finance bank market is thriving since 2017 and has registered growth at a CAGR of 29% between 2017 and 2020 in terms of assets under management (AuM). Currently, the SFB segment is dominated by three banks – (i) AU SFB; (ii) Ujjivan SFB; and (iii) Equitas SFB. They account for around 63% of the total SFB AuM in Fiscal 2020. While Suryoday Small Finance Bank is a smaller player in the segment, it has been growing at an impressive pace since it offers higher interest rates as compared to most of its peers.
SFBs are expected to continue growing over the next few years since the government is trying to increase financial inclusion in the country. The rural parts of India offer a great opportunity for SFBs to establish a market. While the pandemic has affected SFBs too, banks that can successfully keep their NPAs in control are expected to emerge market leaders.
Here is a quick look at the performance of Suryoday Small Finance Bank in comparison to its peers (according to the DRHP) on some key aspects for FY 2020.
|Profit After Tax||Debt to Equity Ratio||Return on Net Worth (RoNW)|
|Suryoday Small Finance Bank Limited||111.20||3.83%||10.43%|
|Ujjivan Small Finance Bank Limited||350.00||0.07%||13.9%|
|Credit Access Grameen Limited||335.49||2.93%||12.27%|
|Spandana Sphoorty Financial Limited||351.46||1.15%||14.42%|
|Bandhan Bank Limited||3023.74||–||19.89%|
|AU Small Finance Bank Limited||674.78||–||15.60%|
All amounts in INR Crore
As you can see, compared to its listed peers, Suryoday Small Finance Bank is smaller but has been growing at a good rate. With strong financials and the government’s thrust for financial inclusion, SSFB can establish itself as a noteworthy player in the segment.
Let’s look at the valuation factors of Suryoday Small Finance Bank in comparison with its peers:
|Earnings Per Share (diluted)||P/E Ratio|
|Suryoday Small Finance Bank Limited||13.30||–|
|Ujjivan Small Finance Bank Limited||2.18||15.66|
|Credit Access Grameen Limited||23.00||31.27|
|Spandana Sphoorty Financial Limited||55.74||10.13|
|Bandhan Bank Limited||18.76||15.91|
|AU Small Finance Bank Limited||22.32||31.90|
As per the peer group selected by Suryoday Small Finance Bank in the RHP, the average PE Ratio is 20.97. If we look at the price band of Suryoday Small Finance Bank IPO and calculate the P/E Ratio at the higher price of Rs.305, then we get a value of P/E Ratio of 22.93. This is slightly higher than the industry average. Therefore, the IPO is a little overvalued.
Suryoday Small Finance Bank Limited proposes to utilize the net proceeds from the fresh issue for:
You can apply for the Suryoday Small Finance Bank Limited IPO by using one of these two methods of payment:
Here are some things that you need to keep in mind before investing in the Suryoday Small Finance Bank IPO:
Q1. What is the Suryoday Small Finance Bank Limited IPO?
The Suryoday Small Finance Bank Limited IPO is a Main Board IPO for the issue of 19,093,070 equity shares having a face value of Rs.10 totalling up to Rs.582.34 crores. The registrar for the IPO is KFintech Private Limited and the shares are proposed to be listed on the BSE and NSE.
Q2. What are the open and close dates of the Suryoday Small Finance Bank Limited IPO?
The Suryoday Small Finance Bank Limited IPO opens on March 17, 2021, and closes on March 19, 2021.
Q3. What are the lot size and minimum order quantity of the Suryoday Small Finance Bank Limited IPO?
The lot size of the Suryoday Small Finance Bank IPO is 49 shares. Also, the minimum order quantity is 49 shares.
Q4. What are the allotment and listing dates of the Suryoday Small Finance Bank Limited IPO?
According to the DRHP, the basis of allotment will be finalized by March 24, 2021. Further, investors can expect to receive the credits in their demat accounts by March 25, 2021.