Shares of ESAF Small Finance Bank debuted at a premium of 19.8% on the BSE on Friday. The stock got listed at Rs 71.9 on BSE as against the issue price of Rs 60. Meanwhile, on NSE, it debuted at Rs 71, a premium of 18.3%.
Ahead of the listing, the company’s shares were trading at a premium of Rs 19 in the unlisted market.
The public offer was subscribed by a massive 73 times at close on strong demand from institutional investors. The QIB category of the IPO was booked 173 times.
ESAF Small Finance Bank has a focus on unbanked and under-banked customer segments, especially in rural and semi-urban areas. The AUM grew from Rs 8,426 crore to Rs 16,320 crore from FY21-23, registering a CAGR of 39.22%, the highest CAGR among peers.
As a small finance bank, ESAF requires at least 75% of its adjusted net bank credit to be allocated to priority sectors. Their business model revolves around responsible banking principles, offering customer-centric products and services through innovative technology applications.
Its asset products include micro loans, retail loans, MSME loans, loans to financial institutions, and agricultural loans. As of March 2023, 62.84% of the lender’s gross advances were directed towards customers in rural and semi-urban areas, and 71.71% of their banking outlets were located in these regions.
The robust demand for the IPO was likely due to strong fundamentals in the company and industry dynamics. “We believe there are a lot of unbanked opportunities in under-banked customer segments, especially in rural and semi-urban centres wherein ESAF SFB has a stronghold in south India,” said Prashant Tapse of Mehta Equities
For the three months ended June, the lender’s total income rose 34% year-on-year to Rs 992 crore, while net profit was up 22% to Rs 130 crore.
Net interest income for the same period increased 30% to Rs 585 crore. Asset quality in the June quarter improved significantly with gross NPAs down to 1.65% from 6.16% a year ago and Net NPAs also declined to 0.81%.
Proceeds from the fresh issue will be used towards augmenting the Bank’s Tier–I capital base to meet its future capital requirements.
ICICI Securities, DAM Capital Advisors and Nuvama Wealth Management were the book-running lead managers to the offer.
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