Everything you need to know about ESAF Small Finance Bank

ESAF Small Finance Bank is launching its IPO. The IPO opens for subscription on November 3, 2023, and will close on 7th November.

What does ESAF Small Finance Bank do?

Established in 1992, ESAF is a Small Finance Bank that primarily provides loans to rural and semi-urban clients. The bank has a presence in unbanked urban, semi-urban, and rural regions offering micro loans, retail loans, MSME loans, loans to financial institutions, and agricultural loans.

What is the issue size of the ESAF Small Finance Bank IPO?

The company’s public offer comprises a fresh issue worth Rs 486.74 crores and an offer for sale of Rs 142.3 crores by existing shareholders, totaling Rs 629.04 crores in equity shares.

Financials of ESAF Small Finance Bank

Financial Year Total Assets (₹ crores) Total Revenue (₹ crores) Profit After Tax (₹ crores) Net Interest Income (₹ crores) EPS
March 31, 2021 12,338.65 1,768.42 105.40 921.591 2.46
March 31, 2022 17,707.56 2,147.50 54.73 1,147.139 1.22
March 31, 2023 20,223.65 3,141.57 302.33 1,836.34 6.73
June 30,
2022 18,104.101 738.32 105.97 448.76 2.36
June 30,
2023 20,795.941 991.78 129.96 585.45 2.89

AUM Breakdown:

Particulars FY23 FY22 FY21
Microloans 75.04% 81.16% 84.80%
Retail loans 16.01% 11.87% 11.40%
MSME loans 0.98% 1.00% 0.57%
Loans to financial institutions. 3.76% 3.32% 3.12%
Agricultural loans. 4.21% 2.65% 0.11%

A few risk factors to consider:

Micro Loan Dependency: The company heavily relies on Micro Loans. Any downturn in the microfinance sector could negatively impact its financial health.

Unsecured Advances: A significant portion of the company’s advances are unsecured. Recovery delays or failures can strain its financial position.

RBI Sanctions: The company risks sanctions from the RBI due to non-compliance with listing Equity Shares by July 31, 2021.

Business Correspondents: Major advances are sourced through business correspondents like ESMACO and Lahanti. Their preference for competitors or termination of agreements can harm the company’s finances.

Gross NPAs: Ineffectiveness in controlling gross NPAs or improving the Provisioning Coverage Ratio can jeopardize the company’s financial stability.

Interest Rate Volatility: Fluctuating interest rates can shrink the Net Interest Margin, affecting the company’s operations and investments, especially given RBI’s reserve requirements.

Regional Concentration: The business is predominantly based in South India, especially Kerala and Tamil Nadu. Economic shifts in this region can influence the company’s financial outcomes.

Funding Challenges: Difficulties in securing competitive funding can materially impact the company’s operations and financial health.

Cyber Threats: The company is vulnerable to cyber-attacks, which can harm its reputation and financial position.

No Proceeds from Offer: The company won’t benefit financially from the Offer for Sale.

Schedule of ESAF Small Finance Bank IPO

Issue Period November 3, 2023, to November 7th, 2023
Price band ₹ 57 - 60
Minimum Bid quantity 250 & Multiples thereof
Deadline for accepting UPI mandate 5:00 PM on the issue Closing Date.
Finalization of Allotment November 10, 2023 - Friday
Initiation of Refunds November 13, 2023 - Monday
Credit of Shares November 15, 2023 - Wednesday
Date of Listing November 16, 2023 - Thursday
Mandate end date November 22, 2023 - Wednesday
Anchor Investors Lock-In End Date December 7, 2023 - Thursday

How to apply for the ESAF Small Finance Bank IPO?

You can apply for the Cello World IPO using any supported UPI app by following two steps:

  • Enter your bid on Kite

  • 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 ESAF Small Finance Bank IPO?

You can check the allotment status for the Cello World IPO on the website of the Registrar and Transfer agent. Alternatively, you can also check the allotment status on the NSE website.