Suryoday Small Finance Bank’s shares debuted today at a discount to their initial public offering (IPO) price. Suryoday SFB’s stock opened at Rs 293 per share, down 3.93 percent or Rs 12 from the issue price of Rs 303-305 per share. On the day of its initial public offering, the company had a market capitalization of Rs 3,109 crore. Suryoday Small Finance Bank joined Dalal Street earlier this week to collect Rs 582 crore through a combination of a fresh issue and a bid for sale of its shares on the bourses. Suryoday SFB issued a total of 19,093,070 equity shares in the IPO.
Suryoday SFB is a leading institution in the region, with a customer base of 1.44 million and 4,770 employees. It operates 554 banking outlets. Suryoday SFB’s promoter shareholding would drop from 30.3 percent to 28 percent after the matter. Meanwhile, the public’s stake in the company will rise to 72 percent, up from 69.7% before the IPO.
Suryoday SFB’s net interest margin increased slightly from 10.4% at the end of FY18 to 11.92% in FY20. Between FY18 and FY20, the company’s net profit increased from Rs 11.49 crore to Rs 111 crore. The SFB’s total non-performing assets decreased by 3.54 percent in fiscal year 2018 to 1.81 percent in fiscal year 2019. In FY20, however, the figure increased to 2.79%. However, the provision coverage ratio is strong at 84.71%.
Suryoday Small Finance Bank will be listed on the bourses alongside AU Small Finance Bank, Equitas Small Finance Bank, and Ujjivan Small Finance Bank. According to HDFC Retail Study, these three SFB industry players account for 63 percent of the industry’s AUM. Suryoday Small Finance Bank, on the other hand, had just 4% of the industry’s AUM at the end of the previous financial year.
Suryopday SFB can list at a discount to its peers in terms of valuation. “Considering the adjusted book value of Rs 135.64 per share on a post-issue basis, the company would list at a P/B of 2.25 times, while peers such as AU Small Finance Bank are trading at 8.44 times P/B,” said analysts at Marwadi Financial Services.