Capital SFB IPO Review

Capital SFB IPO is looking to raise Rs 523.07 crores. The issue is a combination of fresh issue of 0.96 crore shares aggregating to Rs 450.00 crores and offer for sale of 0.16 crore shares aggregating to Rs 73.07 crores. Capital Small Finance Bank is a small finance bank founded in April 2016 and is headquartered in Jalandhar, 

IPO opensFeb 07, 2024
IPO ClosesFeb 09, 2024
IPO Size (Rs.)₹523.07 Cr
IPO Size (shares)
11,176,713 shares
BreakupFresh issue ₹450.00 Cr + OFS ₹73.07 Cr
Face Value:₹10 per share
IPO Price in Rs.₹445 to ₹468 per share
Minimum Lot32 Shares
Listing AtNSE , BSE
QIB ~50 %
NII Quota~15
Retail Quota~35%
 Lead ManagerNuvama Wealth Management, Dam Capital Advisors, Equirus Capital
RegistrarLinkintime

About Capital Small Finance Bank Limited:

  • Incorporated in 1999, Capital Small Finance Bank is a a small finance bank.
  • It started as a Local Bank in three districts of Punjab, Later covered 5 districts in Punjab.
  • It became the first non-NBFC microfinance entity to receive the SFB license in 2015.
  • Capital Small Finance Bank targets middle-income customer segments.
  • It has expanded its SFB operations in northern states of India such as Punjab, Haryana, Rajasthan, Himachal Pradesh and union territories including Delhi and Chandigarh.
  • It had a total of 172 branches and 174 ATMs as of June 30, 2023.

Capital Small Finance Bank Limited: Financials

Particulars/ Rs. Cr.H1Fy24H1Fy23230320222021
Interest income385.98320.73676.01578.2511
Interest expenses215.01169.37354.02322.9313
NII170.97151.36321.98255.3199
Other income29.2322.0849.4854.1945.8
Net total income200.21173.44371.46309.5244
Operating profit75.3867.25148.7113.271.5
Provisions3.2512.3424.5528.7317.8
PBT72.1354.91124.1684.4953.7
Net Profit54.3941.0993.662.5740.8
Adj Book value (Rs)176.7138.8153.8129.2118
Post issue Share Cap45.04    
FV10.0    
IPO price468.0    
EPS Fy2320.8    
PE Fy2322.5    
EPS Fy24 (annualized)24.2    
PE Fy24  (annualized)19.4    
Market cap in cr2,107.9    
Post issue NAV258.1    
P/B post  issue1.8    

Anchor: Capital SFB IPO

  • Capital SFB raised Rs 156.92 crore through its anchor book as it finalised allocation to total 19 anchor investors at a price of Rs 468 apiece. Anchor book included Nippon Life India, Ashoka India Equity Investment Trust, Whiteoak Capital, Ananta Capital Ventures Fund and LC Pharos Multi Strategy Fund among others. Out of the total allocation of 3,353,013 Equity Shares to the Anchor Investors 1,602,592 Equity Shares (i.e. 47.80% of the total allocation to Anchor Investors) were allocated to 3 Mutual Funds have applied through a total of 8 schemes.

Capital Small Finance Bank Limited: Salient Points

  • Existing investors including Oman India Joint Investment Fund, Amicus Capital, Amicus Capital Partners India Fund and others will offload up to 15,61,329 equity shares from their stake via offer-for-sale (OFS). They are only making a part exit.
  • Capital Small Finance Bank targets middle-income customer segments.
  • It has a retail focused liability franchise with a high share of CASA; secured and diversified advances portfolio.
  • Capital SFB intends to continue to grow the loan book organically with focus on secured lending. It intends to leverage technology and data analytics for scalability and profitable growth.
  • The net proceeds from the fresh stake sale shall be utilized towards augmenting the Bank’s Tier-I capital base to meet its future capital requirements.
  • In June 2023, company raised Rs. 50 cr. at Rs. 468 per share from Max Life Insurance which has come as a strategic partner.
  • As on September 30, 2023 and March 31, 2023 respectively, 99.85% and 99.82% of its loan book was secured with 84.26% and 85.16% of the loans secured by immovable properties.
  • Peers
AU Small Finance59611523158913.8%25.13.5639,826
Equitas SFB102599478113.0%14.82.1511,595
Suryoday SFB179151715510.2%12.31.031,898
Ujjivan SFB586063126120.8%92.4811,352
ESAF Small Fin78.2366440911.2%8.321.514,025
Capital SFB468.079810713.4%19.71.812,107.9
SFBPEP/adj BVNNPA%ROEROALoan growth %
Capital SFB19.421.4151.313
Jana SFB10.51.50.913.11.535
AU SFB31.14.40.613.713.724
Ujjivan SFB12.92.60.127.83.226.9
Equitas SFB15.92.3113.71.937.1
Utkarsh SFB12.92.20.216.72.326.4
ESAF9.11.71.217.21.837
Suryoday SFB12.21.11.5 1.428.7
  • Jana SFB IPO, which is open – Jana SFB, is priced at PBV of 1.3x on higher NIM of 7.8% and has better asset quality for a bigger loan book than Capital SFB IPO.
  • The other ongoing IPO , Jana SFB has assets of ₹21,000 crore and is the fourth largest bank in the SFB category, while Capital with ₹5,500 crore would be the smallest SFB on listing.
  • Capital SFB’s deposits are at a cost of 4.9%, which is the lowest among listed peers.
  • Capital SFB IPO is coming at a PE ratio of 16.9x (fy23 earnings) and 10.2x (fy24 annualized earnings.
  • The scrip is being offered at a price to Adj BV multiple of 2.0x at the upper price band.
  • My chances of applying in Capital SFB IPO are slightly less though it has some strengths. My preference among the current running main board IPOs remains Rashi, Jana, Capital SFB in this order. The IPO looks OK from a long term view. Plus point is that almost its full book is secured.
  • GMP as heard on Social Media may be around Rs. 55.
  • Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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