Equitas Small Finance Bank fixes IPO price band at ₹32-33

Our Bureau Chennai | Updated on October 15, 2020 Published on October 15, 2020

Equitas Small Finance Bank (ESFBL), the subsidiary of Equitas Holdings, has fixed a price band of ₹32-33 per share for its upcoming initial public offering (IPO).

The issue, which consists of a fresh issue of up to ₹280 crore and an offer for sale of up to 72 million equity shares by Equitas Holdings, will be open for anchor investors on October 19 and for all other investors between October 20-22. The current price band translates to an issue size of ₹510-518 crore.

Addressing a virtual press conference to discuss about the bank's proposed IPO, PN Vasudevan, MD & CEO of Equitas Small Finance Bank said that leveraging the existing network of branches, deepening the penetration of products in existing geographies and reducing cost-income ratio will be the major areas of focus for the small finance bank in the medium term.

"Over the last four years, we have created a large infrastructure of IT systems, branches, staffs and a wide range of lending and liability products. So, now our first and foremost key growth strategy going forward is to leverage our existing network for getting more penetration," Vasudevan said.

ESFBL is the largest SFB in India in terms of number of banking outlets, and the second largest SFB in India in terms of assets under management and total deposits in fiscal 2019. As of June 2020, the lender had 856 banking outlets spread across 17 States and union territories in India.

"Over the last two years, we haven't added much of branches yet we are able to record 35% growth. Going forward, for the medium term, we are planning to contain the cost in terms of not expanding too much network of branches," Vasudevan said.

He further said that the other key areas of focus for the bank will be further strengthening the liability franchise and deposit mobilisation.

ESFBL's total deposit has grown from ₹5,604 crore in FY18 to ₹11,787 crore as of Q1FY21. It also has a diversified mix of loan book which includes loans to small businesses, micro finance and vehicle finance. Gross advances of the lender as on Q1FY 21 stood at ₹15,573 crore.

"If our advances have to grow at 35% then our deposit has to grow at 50% because we have also SLR and CRR requirement on top of funding advances. We have been able to grow consistently our deposits over the last 4 years with a decent CASA ratio. Our cost of funds has been coming down in the last 2-2.5 years and we see the interest cost coming down further as our CASA ratio goes up," Vasudevan said.

He also pointed out that the bank's NPAs have been maintained at the levels of 2.6-2.8 per cent over the last 3-4 years due to very good control over the quality of assets.

"We have a large amount of unmet demand for credit and we come from a background of NBFC where we have a DNA of being able to lend to small customers and able to recover from them and we have a very good control over our asset quality," he added.

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Published on October 15, 2020
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