Capital Small Finance Bank Limited is launching its IPO. The IPO opens for subscription on February 07, 2024, and will close on 9th February 2024.
What does Capital Small Finance Bank do?
Incorporated in 1999, Capital Small Finance Bank Limited is a small finance bank. In 2015, it secured the SFB license, becoming the first non-NBFC microfinance entity to do so. The bank primarily serves semi-urban and rural areas, using a branch-based model to facilitate its services.
They focus on middle-income customers earning between ₹0.4 million and ₹5 million annually. The bank intends to be the primary banking partner for this demographic by providing a diverse product offering, customer service, physical branches, and digital channels.
The bank’s headquarters is in Jalandhar, Punjab, and it also operates in Delhi, Himachal Pradesh, Punjab, Haryana, Rajasthan, and the Union Territory of Chandigarh. The expansions allow the bank to supply a broader range of banking products. To meet its clients’ diverse financial needs, it offers agriculture loans, MSME and trading loans (working capital, machinery loans, and so on), and mortgages.
As of June 30, 2023, the bank operated 172 branches and 174 ATMs, primarily situated in rural and semi-urban areas across 24 districts. This network aligns with the bank’s primary focus on serving middle-income customers, particularly in these regions.
Security of the loan portfolio is a priority for the Bank, with a significant portion of its loans secured by immovable properties as of March 31 and June 30, 2023. The average ticket sizes for the different customized loan products including mortgages, MSME, trading, and agriculture were ₹1.16 million, ₹1.82 million, and ₹1.23 million, respectively, as of March 31, 2023.
What is the issue size of Capital Small Finance Bank Limited IPO?
The public offering is a book-built issue with a total value of Rs 523.07 crore. It comprises a fresh issue of 0.96 crore shares, amounting to Rs 450.00 crores, and an offer for sale of 0.16 crore shares, valued at Rs 73.07 crore.
Financials of Capital Small Finance Bank Limited IPO
| Financial Year | Total Assets (₹ crores) | Total Revenue (₹ crores) | Profit After Tax (₹ crores) | Net Interest Income (₹ crores) | EPS |
|---|---|---|---|---|---|
| March 31, 2021 | 6,371.23 | 557.27 | 40.78 | 198.61 | 11.98 |
| March 31, 2022 | 7,153.92 | 632.40 | 62.56 | 255.28 | 18.22 |
| March 31, 2023 | 7,990.77 | 725.48 | 93.59 | 321.98 | 27.21 |
| September 30, | |||||
| 2022 | 7,615.39 | 342.80 | 41.09 | 151.35 | 11.97 |
| September 30, | |||||
| 2023 | 8,390.69 | 415.21 | 54.39 | 170.97 | 15.49 |
Risk factors to consider:
Regulatory Compliance: The bank is required to comply with various regulatory requirements, and any failure to do so could have adverse effects on its business, financial condition, results of operations, and cash flows.
RBI Inspections: The Reserve Bank of India (RBI) conducts regular inspections, and past non-compliances have required corrective actions. Failure to comply with RBI observations could negatively impact the business, financial condition, results of operations, and cash flows.
Proceeds from Offer for Sale: The bank will not receive any proceeds from the Offer for Sale, which includes both a Fresh Issue and an Offer for Sale. This could affect the bank’s financials.
Negative Cash Flows: The bank has experienced negative cash flows in prior years, particularly due to operating activities. This negative cash flow may impact its financial stability.
Indebtedness: As of December 31, 2023, the bank had significant indebtedness, including secured and unsecured borrowings. Difficulty in securing funding or servicing debt obligations could harm the business.
Geographical Concentration: The bank’s business is concentrated in North India, particularly in Punjab. This concentration exposes it to regional factors that may impact its operations.
CASA Ratio: Failure to maintain a sufficient Current Account Savings Account (CASA) Ratio could result in higher funding costs, affecting the ability to grow and compete.
Collateral Value Decline: Losses may occur if the value of collateral obtained as security for loans declines, and the inability to recover the full value of collateral could harm the business.
Cyber Threats: The bank faces cyber threats that may disrupt services or lead to data theft, damaging its reputation and financial condition.
Listed Non-Convertible Debentures: The bank’s non-convertible debentures are listed on BSE, and non-compliance with rules and regulations may result in penal actions.
Inflation: High inflation rates may increase interest rates and costs for the bank, impacting its expenses.
Utilization of Fresh Issue Proceeds: The proceeds from the Fresh Issue will be used to increase the risk-weighted assets of the bank to meet regulatory requirements.
Schedule/Timeline of Capital Small Finance Bank Limited IPO
| Issue Period | February 07, 2024, to February 9th, 2024 |
|---|---|
| Price band | ₹ 445 - 468 |
| Minimum Bid quantity | 32 & Multiples thereof |
| Deadline for accepting UPI mandate | 5:00 PM on the issue Closing Date. |
| Finalization of Allotment | February 12, 2024 - Monday |
| Initiation of Refunds | February 13, 2024 - Tuesday |
| Credit of Shares | February 13, 2024 - Tuesday |
| Date of Listing | February 14, 2024 - Wednesday |
| Mandate end date | February 24, 2024 - Saturday |
| Anchor Investors Lock-In End Date | |
| (50% of the Investment) | March 13, 2024 - Wednesday |
| Anchor Investors Lock-In End Date | |
| (Remaining of the Investment) | May 13, 2024 - Monday |
Note: Given that the above schedule is tentative, it should be noted that the anchor lock-in period ends 30 days after the actual allotment date for 50% of the shares, and 90 days after for the remaining portion.
How to apply for the Capital Small Finance Bank Limited IPO?
You can apply for Capital Small Finance Bank Limited IPO using any supported UPI app by following two steps:
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Enter your bid on Kite
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Accept the UPI mandate on your phone
On acceptance of the mandate, the bid amount will get blocked in your bank account. Click here to learn more.
How to check the allotment status of the Capital Small Finance Bank Limited IPO?
You can check the allotment status for the Capital Small Finance Bank Limited IPO on the website of the Registrar and Transfer Agent. Alternatively, you can also check the allotment status on the NSE website.