Equitas Small Finance Bank IPO – Important Details

Introduced in 1993, Equitas Small Finance Bank Ltd, headquartered in Chennai, was india’s biggest small finance bank regarding banking networks in Fiscal 2019 and the second biggest small finance bank comparing managed assets and total funds. They have come up with Equitas small finance bank IPO

It has the biggest distribution platform between Small Finance Banks (SFBs), comprising 853 financial branches and 322 ATMs In 15 states/ UTs of India.

It has a sustainable lending activities and less reliance on financial institutions, unlike other microfinance firms. The bank offers a broad variety of banking facilities and programs with a primary emphasis on financially underprivileged and underrepresented clients.

Microfinance lending facilitating economic development, mortgage loans, automobile financial services, and MSE funding are given by the organisation. It provides monetary services as per the revenue level of the client, the kind of protection accessible and the characteristics of the organisation.

In addition , current accounts, payroll accounts, term deposits, various cash accounts, ATM-cum-debit cards, bond fund services, third-party policy, and FASTag distribution are also issued by the financial institution.

Promoters of the Firm

Equitas Holdings Limited is the promoter company of Equitas Small Finance Bank Ltd.

Management

Mr. Vasudevan P N (MD & CEO)

Financials Trends

Items	For the year/period (All amounts are in Million)

	30-Jun-20	31-Mar-20	31-Mar-19	31-Mar-18
Gross Assets	208921	193145	157626	133011
Gross Income	7509	29278	23948	17729
Gross Expenses	6933	26841	21842	17410
Profit After Tax	576	2436	2105	318

 

Equitas Small Finance Bank IPO Summary

IPO Date	20 October, 2020 to 22 October, 2020
Issue Type	Book Built Issue IPO
Issue Size	Equity Stocks of Rs.10 totaling up to Rs.517.60 Crore
Fresh Issue	Equity Stocks of Rs.10 totaling up to Rs.280 Crore
Offer for Sale	7,20,00,000 Equity Stock of Rs.10 totaling up to Rs.237.60 Crore
Face Value	Rs.10 per equity stock
IPO Price	INR 32 to Rs.33 per equity stock
Market Lot	450 Stocks
Min Order Quantity	450 Stocks
Listing At	Bombay Stock Exchange, National Stock Exchange

Reserves for Equitas Holdings share holders:

Under the stockholder section of this IPO, buyers holding EHL stocks on October 11, 2020 are qualified to participate. 10 percent of the proposal is now secured by the firm for stockholders (around 51 Cr). EHL stakeholders can claim up to 2 lakh in the category of stakeholders.

Inside the retail category, EHL stakeholders may also participate. In addition, if an staff member is also an EHL stockholder, he / she is also qualify for applications in all 3 types: RII (close to 2 lakhs), stockholder (close to 2 lakhs) and Staff (Close to 5 Lakhs).

Equitas Small Finance Bank IPO’s Tentative dates 

Bid/Offer start date	20 October, 2020
Bid/Offer end date	22 October, 2020
Allotment finalization date	27 October, 2020
Refunds starting from	28 October, 2020
Shares to be credited in Demat Account	29 October, 2020
Listing Date for IPO	02 November, 2020

Purpose of the IPO:

In order to meet its potential financial commitments, Equitas Small Finance Bank Limited plans to use the top line proceeds from this topic to raise its Tier I financial strength.

DRHP

Issued : 25 September, 2020

The firm submitted an addendum to its DRHP modifying its proposal size for the planned IPO of its equity securities in compliance with the relief allowed by SEBI, as follows:

• The New Issue scale has been decreased from up to 5,50 Cr. to 2,80 Cr.
• The quantity of equity stocks issued by the firm through the OFS was decreased from up to 80,000,000 equity stocks to up to 72,000,000 equity stocks.
• The Staff Allocation Section was decreased from up to $ 5 Cr. to up to $ 1 Cr. for qualifying staff.
• The EHL investor Reservation part was decreased from up to 1,00 Cr. to up to 51 Cr. for qualified EHL stockholders.

Key Points of Equitas Small Finance Bank IPO:

1. Corona Virus

Corona Virus ‘s ongoing effects are extremely unstable and could be substantial and could have a detrimental affect on the firm, activities and potential financial results of the firm.

2. Regulatory Specifications

The lender is liable to strict legislative and institutional standards and its failure to adhere with such laws , regulations and standards can have a negative impact on its sector, operating efficiency, fiscal position and money circulates.

3. Threat of interest rate

Bank’s market is prone to interest frequency uncertainty and any interest level uncertainty or vulnerability to handle interest price threat may negatively impact its net interest yields, taxable operating profit, corporation, financial situation, operating performance and working capital.

4. Operational Issues

As of now, it has a narrow operational past. On behalf of its changing and increasing size of the company, its potential financial and strategic success can not be measured. Consequently, its potential results could not indicate our previous trends.

5. Sectors

Any unfavorable changes, like tiny enterprise lending, microfinance and automobile lending, in the divisions in which the company operate could significantly impact its revenue and operating performance.

6. Results system

Indian banking firms are actually expected to file income reports as per Indian GAAP. Nevertheless, Equitas Holdings Limited, the founder of Equitas SFB, is generally preparing its income reports under the Indian Accounting Standard and is therefore expected to file limited economic details for the limits in compliance with Equitas Holdings Limited’s reporting regulations.

There are variations among Ind AS and Indian GAAP, which may be relevant to the evaluation of the fiscal position of the lender by shareholders. The fiscal reports that Ind AS may be needed to file in the coming years will not be equivalent with the fiscal reports presently prepared in compliance with Equitas Holdings Limited’s financial reporting for the particular time of consolidating the earnings of Equitas Holdings Limited.

7.  Fund Demand

We have an ongoing funding demand and the failure of the bank to reach funding sources in an effective and efficient manner or any obstruction of access to capital will significantly impact its operational , financial and money management performance.

8. Main Location

A good chunk of the lender’s loans are against clients particularly in the province of Tamil Nadu and certain factors specific in the circumstances impacting the area can have a negative effect on its business , financial position, overall profitability and working capital.

9. Customer Base

The funds of the lender depends on a small range of clients and the decline of these clients could have a significant and terrible impact on its inventory of reserves, supplies of liquidity and working capital.

10. Working Style

The valuation of the collateral of the lender may decline or there may be gaps in the compliance of collateral if the creditors fail to meet their commitments, which may lead to the collapse to repay the anticipated value of the leverage contributing them to possible damages.

11. loan portfolio

Any protection that could enable guarantee recovery of debt is not assisted by the lender’s microfinance loan book and the unprotected business loan portfolio and, in the case of a default by the consumer of some of those loans, the pending amount will not be recovered.

12. Mortgage Loans

There is a major exposure of the lender to mortgages against property. owing to varying land values, it may not be possible to notice the estimated value of the guarantee on mortgages and/or impose the guarantee in a reasonable time or at all in the case of insolvency and this may have a significant unfavorable affect on its company, operating results, and working capital.

Summary

Throughout the last 3 years, Equitas Small Finance Bank has reported good income performance. As among the country’s biggest SFBs, most buyers wish to be a part of its company’s growth. Read and understand through the profitability of a business and the Red Herring Prospectus (RHP) thoroughly before investing. Please also a advise of your financial adviser before investing as they are many risk involve in share market.

We hope we are able to answer all you questions about In Equitas Small Finance Bank IPO. If you don’t have Demat account open it now with Zerodha best trading app.

When IPO of Equitas Small finance bank will open?

The IPO will open on 20th Oct. 2020 & will close on 22nd Oct. 2020.

When investors get the Allotment of share in Equitas IPO?

The finalization of share will happen on 27th Oct. 2020 & Investor will get share in their account on 29th Oct. 2020.

Can I apply for IPO from Zerodha?

Yes, you can apply from Zerodha app from console area.

How much is the premium going on Equitas IPO in Grey market?

As of now its 20%, However, it may change near to the IPO closure dates.

When the IPO of Equitas Small Finance bank is going to list in share market?

It will be listed on 2nd Nov. 2020. Just near to the US elections so that is also a risk Involve in this IPO.