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  • Writer's pictureJatin Agarwal

Capital Small Finance Bank IPO

Capital Small Finance Bank IPO: A Milestone in Financial Inclusion


Capital Small Finance Bank logo

Company Overview

Capital Small Finance Bank, established in 1999, has the distinction of being India's first small finance bank, receiving its SFB license in 2015. Focused on serving middle-income customers in rural and semi-urban areas, the bank has shown a strong commitment to financial inclusion. With a notable presence in northern India, it operates 172 branches across five states and one union territory, providing a wide range of financial products and services​.

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Company Financials

  • Revenue Growth: For the fiscal year ending March 31, 2023, the bank reported a revenue of ₹725.48 Crores, reflecting a 14.72% increase from the previous year's ₹632.40 Crores.

  • Profit After Tax (PAT): The PAT for FY 2023 stood at ₹93.60 Crores, marking a 49.59% rise from ₹62.57 Crores in FY 2022.

  • Assets: Total assets reached ₹8,390.69 Crores by September 30, 2023, up from ₹7,153.92 Crores on March 31, 2022​.

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Company SWOT Analysis

  • Strengths: Strong retail focus, high CASA ratio, diversified and secure loan portfolio, experienced leadership.

  • Weaknesses: Concentration in the northern region might limit geographical diversification.

  • Opportunities: Expansion into other regions, leveraging digital banking to attract younger demographics.

  • Threats: Increasing competition from other small finance banks and fintech companies, regulatory changes.


Company Valuation

  • Market Capitalization: Post-IPO, the bank's market capitalization is projected at ₹2104.41 Crores.

  • P/E Ratio: Based on annualized FY 2023 earnings, the P/E ratio ranges from 17.68 pre-IPO to 19.35 post-IPO, reflecting the price investors are willing to pay per rupee of earnings.

  • ROE: The Return on Equity stands at 16.45%, indicating the bank's efficiency in generating profits from shareholders' equity.

  • Debt/Equity Ratio: At 0.95, this ratio showcases the bank's balanced approach to financing its operations through debt compared to equity.

IPO Overview

The IPO marks a pivotal step towards augmenting the bank's Tier-I capital base to support its future capital requirements and expansion plans​.

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IPO Details

  • Opening Date: February 7, 2024

  • Closing Date: February 9, 2024

  • Price Band: ₹445 to ₹468

  • Issue Size: ₹523.07 Crore

  • Lot Size: 32 Shares

  • Minimum Investment: ₹14,976 for retail investors​

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Objectives of the Issue

The fresh issue proceeds are earmarked for enhancing the bank's Tier-I capital to meet future capital requirements and other corporate purposes, aiming to bolster its growth trajectory and operational capabilities​.

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IPO Grey Market Premium (GMP)

The GMP is currently at ₹50 which indicates listing gains might happen.


Conclusion

Capital Small Finance Bank's IPO presents a strategic opportunity for investors to participate in the growth story of India's pioneering small finance bank. With its strong financials, customer-centric approach, and clear growth strategies, the bank is well-positioned to capitalize on the expanding financial inclusion and digital banking landscape in India.


Disclaimer

All information is provided for educational and informational purposes only. Data is fetched from publicly available sources such as the DRHP filed by the company and other reliable sources. The website or the author takes no guarantee for the accuracy of the data; however, we have tried our best to present accurate data to our readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.

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