Suryoday Small Finance Bank Debuts On Bourses At 4% Discount
Shares of Suryoday Small Finance Bank, a four-year-old lender, dropped on its market debut after its Rs 580 crore initial public offering failed to garner investor interest.
The stock listed at Rs 293 apiece, a 4% discount to its issue price of Rs 305, according to data available on the bourses. The shares touched a low of Rs 278.8, a decline of as much as 8.6%, in the early trade on Friday. Suryoday Small Finance Bank, along with Kalyan Jewellers, shares the third slot for debuting at a discount after Indian Railways Finance Corp. and Anupam Rasayan Ltd. so far in 2021.
The lender’s IPO subscribed 2.37 times, the least so far in 2021. It received bids for 3.2 crore shares compared to 1.35 crore on offer. The retail portion subscribed 3 times, while that of institutional and non-institutional investors received 2.18 times and 1.31 times, bid, respectively.
Shares were sold at Rs 303-305 apiece, valuing the lender at around Rs 3,200 crore at the upper end. Suryoday had already completed a pre-IPO placement worth around Rs 150 crore, issuing shares at Rs 291.75 apiece to investors like SBI Life and Axis Flexi Cap Fund, among others.
According to the bank’s red herring prospectus, the fundraising will help Suryoday Small Finance Bank to augment its capital base. As on Dec. 31, the bank’s capital adequacy ratio stood at 41.17%, where tier-1 capital constituted 34.3%.
Incorporated as Suryoday Micro Finance Pvt. in 2008, the lender was granted a small finance bank licence in 2016. A year later, it started commercial operations according to the RBI’s guidelines. As on Dec. 31, the bank had a customer base of 14.4 lakh, with 4,770 employees and 554 banking outlets.
The bank’s outstanding deposits stood at Rs 3,344 crore, where low-cost current account savings account deposits constituted 13.32%. Overall retail deposits formed 72.4% of the total deposits as of Dec. 31, the bank said in its red herring prospectus. About 73% of the bank’s deposits came from Maharashtra and Tamil Nadu alone.
The bad loan ratios, however, remained low largely because of the Supreme Court’s interim order in the interest-on-interest case, where banks were not allowed to recognise fresh bad loans after Sept. 1.
Without the Supreme Court’s order, the bank’s gross NPA ratio would be at 9.28% and net NPA ratio would be at 5.38% at the end of the third quarter.