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Utkarsh Small Finance Bank will launch its ₹500 crore initial public offering (IPO) on July 12, with the price band being set at ₹23-25.
The IPO, entirely a fresh issue of shares, will close for subscription on July 14. Minimum Bid Lot is 600 equity shares. While not less than 75 per cent of the issue would be available for allocation to QIBs, up to 15 per cent is reserved for non-institutional investors and the balance 10 per cent for retail individual investors.
Expansion plans
The IPO proceeds will be used to expand the bank’s business over the next two years and help it become a multi-product bank, with MD and CEO Govind Singh saying that following the IPO the bank’s capital adequacy ratio is expected to increase by 2-3 per cent from the current level of 20.6 per cent.
Thereon, the bank will aim to maintain the capital adequacy at around 20 per cent, he said, adding that it also expects to maintain net interest margin at around the level of 9.6 per cent as of March 2023.
Bank’s operations
The Varanasi-based SFB has operations across 26 States and Union Territories with 830 Banking Outlets and 15,424 employees, wherein 27.4 per cent of outlets are in unbanked rural centres. It has 36 lakh customers as of March 2023.
However, much of these are in Bihar and Uttar Pradesh, with these states comprising 57 per cent of the bank’s gross loan portfolio. It also has a strong presence in the National Capital Region (NCR).
While it may look to strengthen its presence in other areas, the focus for the SFB will be on offering more products and business verticals through the existing network rather than on expanding to new geographies, the management said.
“Our strategy has been to develop more and more branches in the same geography and is not limited to more branches but more verticals in the same branches,” Singh said, adding that having multiple products will also help improve cost efficiency.
Deposits of the bank were at ₹13,710 crore as of March 22023, of which the share of low-cost CASA deposits was 17.7 per cent. The gross loan portfolio stood at ₹13,957 crore.
The book running lead managers of the IPO are ICICI Securities Ltd, and Kotak Mahindra Capital Company Ltd, whereas the registrar is KFin Technologies Ltd.
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