Capital Small Finance Bank IPO

 

Capital Small Finance Bank  Limited began operations as India’s first small finance bank in 2016, and for Fiscal 2021, they are one of Country’s top SFBs in terms of asset quality, cost of funding, retail deposits, and CASA deposits.  Capital Small Finance Bank IPO will hit the market in February 2021.

About Capital SFB

Prior to their conversion to a small finance bank, they had over 20 years of expertise in the banking industry, having served as the biggest local area bank. (As per the CRISIL Research Report)

In 2015, they were among two non-NBFC microfinance entities to get the SFB licence (Source: CRISIL Research Report).

Their main goal is to establish a strong retail banking franchise by making loans more accessible in the states where they operate, with a concentration on rural and semi-urban areas.

They primarily target customers in the middle-income range, i.e., those with an annual income of ‘0.4 million to ‘5 million.

Highlights of Operation

In comparison to other SFBs, Capital Small Finance Bank have the most diversified portfolio with a large book in numerous asset classes, with the greatest share of secured lending at 99 percent as of Fiscal 2021. (According to the CRISIL Research Report.)

As of Fiscal 2021, They have the finest asset quality among SFBs, with the lowest GNPA and NNPA of 2.08 percent and 1.13 percent, respectively.

Furthermore, when compared to other SFBs, they have the biggest CASA ratio of 40% in Fiscal 2021 and are one of the top 10 banks in terms of private sector banks.

As of Fiscal 2021, they also have the biggest retail deposits per branch of ‘322.50 million and the cheapest cost of funds among the SFBs.

Presence

They use a branch-based approach to operate. They have strategically developed our SFB activities throughout the north Indian states of Punjab, Haryana, Rajasthan, and Delhi, where they offer their banking services in a contiguous way.

They are headquartered in Jalandhar, Punjab. In comparison to other SFBs in Punjab, they have the biggest branch network, and they are the fourth biggest among private sector banks. (According to the CRISIL Research Report.)

They had 159 branches and 161 ATMs in four states as of June 30, 2021, with 74 percent of their branches in rural and semi-urban locations spanning 19 districts and 77.35 percent of their total clients (both credit and deposit).

Capital Small Finance Bank IPO

Capital Small Finance Bank Limited, headquartered in Jalandhar has submitted Draft Red Herring Prospectus(DRHP) to Securities and Exchange Board of India(SEBI) for initial public offering (IPO) of INR 450 crores & 3,840,087 equity shares on 30 October 2021.

The offer includes fresh issue of INR 4500 crores value equity shares and there is an offer for sale (OFS) of 3,840,087 equity shares by the promoters mentioned in the DRHP. They are looking for a pre-IPO placement of 90 crores in this issue.

They are now waiting for approval from Securities and Exchange Board of India(SEBI) to float the initial public offering (IPO) in the market.

Financials Trends

Particulars	For the year/period ended ( in Cr.)
	30-Jun-21	31-Mar-21	31-Mar-20	31-Mar-19
Total Assets	6,565.85	6,371.24	5,329.88	4,321.20
Total Revenue	147.39	557.30	501.09	377.60
Profit After Tax	12.18	40.78	25.38	19.41

Basic and Diluted Earnings Per Share

Financial Period	Basic EPS (in INR)	Diluted EPS (in INR)	Weight
Financial Year 2021	12.04	11.98	3
Financial Year 2020	8.18	8.16	2
Financial Year 2019	6.82	6.82	1
Weighted Average	9.88	9.85
30 June 2021	3.59	3.57

Objects of the Issue

• Prepayment / repayment of all or a portion of the outstanding borrowings of the company to be availed on consolidated basis.
• To meet common corporate objectives.

Basis of the offer

The following key strengths, they feel, enable them to compete successfully in the industry:

• Secured and diverse advances portfolio.
• Strong retail liability franchise with a significant percentage of CASA.
• Processes for assessing creditworthiness and risk management.
• A customer-centric strategy and a thorough understanding of the target market.
• A track record of consistent growth, with operational and financial measures that are always increasing.
• Professional and experienced leadership team with excellent corporate governance, supported by reputable shareholders.

Capital Small Finance Bank IPO Peer Comparison

S. No.	Face Value	Company Name	PE
1	1	City Union Bank Limited	20.68
2	10	AU Small Finance Bank Limited	30.98
3	10	Equitas Small Finance Bank Limited	18.47

Note:

1. From the NSE portal, the closing price of these equity shares on October 27, 2021.
2. All financial data for listed industry peers is consolidated (unless otherwise stated) and derived from the respective firm’s annual results/reports for the fiscal year ended March 31, 2021.

Capital Small Finance Bank IPO Details

IPO Opening Date	February 2021
IPO Closing Date	February 2021
Issue Type	Book Building
Face Value	10 per share
IPO Price	0 to 0 per equity share
Market Lot	–
Min Order Quantity	–
Listing At	BSE, NSE
Issue Size	–
Fresh Issue	450 Crores
Offer for Sale	3,840,087 Equity Shares

Capital Small Finance Bank IPO Date

Capital Small Finance Bank IPO opening date is February 2021, and the closing date is February 2021. The Capital Small Finance Bank issue may list in February 2021.

IPO Opening Date	February 2021
IPO Closing Date	February 2021
Basis of Allotment Date	February 2021
Initiation of Refunds	February 2021
Credit of Shares to Demat Account	February 2021
IPO Listing Date	February 2021

Basis of Allotment

Type	% of Offer	Basis of Allotment
Qualified Institutional Buyer	50	Roughly  equivalent
Non Institutional Investor	15	Roughly  equivalent
Retail	35	Minimum level of 1 lot, based on availability, for every shareholder.

Capital Small Finance Bank IPO Allotment Status

Allotment of equity stocks subject to the Fresh Issue and transfer of the Promoter Selling Shareholders’ OFS Stocks to the winning Bidders subject to the Offer for Sale. Nevertheless, the status of the allotment has yet to be revealed.

Here, you can find the Allotment Status of Capital Small Finance Bank IPO.

Capital Small Finance Bank IPO GMP

Capital Small Finance Bank IPO Grey Market Premium is 0. You can check out GMP of Other IPOs on below Links:

Date	GMP (in Rs)	Subject to Sauda	Kostak (in Rs)
February 2021
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Check Out the GMP of all Other IPOs

IPO Grey Market Premium

Capital Small Finance Bank IPO Review

Capital Small Finance Bank IPO review will depend on the price band which will be announced after SEBI approval. Whenever it will be announced we will update you regarding review of Capital Small Finance Bank IPO is good or bad.

Capital Small Finance Bank IPO Risk

• Their operations are mostly focused in North India, especially in the Punjab state.
• They are bound by stringent regulatory and prudential standards.
• COVID-19 has had and may continue to have a negative impact on their business.
• They are susceptible to operational and credit risks, which could result in non-performing assets (NPAs).
• Interest rate fluctuation may have an impact on them, causing their Net Interest Margin to drop and negatively impacting their results of operations.
• They are involved in a number of legal proceedings, the outcome of which could have a negative impact on their reputation.
• Presently, their firm relies heavily on banking operations in rural and semi-urban areas.

Other Threats

• In the past, their Bank had made various equity share allotments to a total of more than 49 investors.
• It could have a major negative impact on their business if they are unable to acquire capital on suitable terms and at competitive rates when they need it.
• In the past, their Bank has experienced delays and defaults in the payment of statutory dues.
• They rely heavily on and upgrade their information technology systems, and any outages or data breaches could have a negative impact on their operations and reputation.
• They might not be able to keep or renew the statutory and regulatory permits, licences, and approvals they need to run their business.

Asset Quality

Their superior underwriting expertise, credit evaluation, efficient collections, and risk management capabilities have resulted in a high-quality asset portfolio. (Source: CRISIL Research Report)

They have the least gross and net NPA ratios across SFBs in India, and their gross NPA ratio of 2.1 percent is second best across private sector banks (Source: CRISIL Research Report).

Since a major amount of their loan book is secured, and also their thorough risk assessment and credit screening, they have the minimum write-offs across SFBs and private sector banks (Source: CRISIL Research Report).

Their gross nonperforming assets (NPAs) were 912.43 million and 782.43 million as of June 30, 2021 and March 31, 2021, respectively.

Capital Small Finance Bank IPO Brokerage views

• Yes Securities : Not Updated
• Choice Brokering: Not Updated
• Axis Securities: Not Updated
• IIFL Securities: Not Updated
• Trade swift: Not Updated
• Anand Rathi : Not Updated
• ICICI Securities: Not Updated

Capital Small Finance Bank IPO Subscription Status

Date	Day	QIB	NII	Retail	Employees	Total Subscription
February 2021	1
February 2021	2
February 2021	3

Management

Mr. Sarvjit Singh Samra, a first-generation entrepreneur with over 30 years of expertise in the banking and financial services sector, is among their Promoters (as well as their Managing Director and Chief Executive Officer).

In addition, their Board is supported by an experienced and competent management team that includes individuals with a wide range of banking and financial services experience.

Furthermore, with the exception of their Company Secretary and Compliance Officer, all of their key management personnel have been with company since their days as a local bank.

Amicus, ICICI Prudential, and HDFC Life are among the major investors and financial institutions that have backed them.

Promoters

• Sarvjit Singh Samra
• Amarjit Singh Samra
• Navneet Kaur Samra
• Surinder Kaur Samra
• Dinesh Gupta

Principal Shareholders’s Holding

Pre Issue Share Holding	23.33%
Post Issue Share Holding

Capital Small Finance Bank IPO Prospectus