Fino Payments Bank IPO envisages to raise Rs 1,200-crore iand has fixed a price band of Rs 560-577 a share. Fino Payments Bank will the first payment bank in the country to list on exchanges. It is more of a fintech company offering a diverse range of payment focused financial products and digital services. There are 6 active payments banks in the country. RBI introduced the concept of payment bank to encourage financial inclusion and facilitate payments through digital means.
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Fino Payments Bank IPO Details:
| Total IPO Size: Rs. 1,200 cr |
| •Rs. 300 cr fresh issue to augment Banks Tier 1 capital |
| •Rs. 900 cr OFS by promoter Fino Paytech |
| •Price band: Rs. 560-577 per share |
| •IPO Date: 29th Oct to 2nd Nov 2021 |
| •Retail Portion: 10% , 2,075,031 equity shares |
| •FV of shares : Rs. 10/- |
| •Bid lot: 25 shares |
| •Retail applications needs for 1x : 0.83 L |
ANCHOR ISSUE:
Fino Payments Bank garnered Rs 539 crore from 29 anchor investors ahead of its initial share sale.
Investors included names like Fidelity, HSBC Global, Pinebridge, Aditya Birla Sun Life Mutual Fund (MF), Tata Mutual Fund, SBI Life Insurance Company, Invesco etc.
Fino Payments Bank IPO Review : Video Presentation
About Fino Payments Bank IPO
- Fino Payments Bank was incorporated on 4th April 2017.
- Company is a wholly-owned subsidiary of Fino Paytech Ltd.
- Fino paytech shareholders include investors such as ICICI Bank Ltd, Intel Capital Corporation, International Finance Corporation, Blackstone, Bharat Petroleum Corporation Ltd etc.
- Company earns fee income for digital payment products and services offered digitally to 7.8 lakh merchants \
- Concentrated mainly in rural areas of UP, Bihar, MP.
- Deals in micro-ATM, bill payment, debit cards, cash management, third-party financial products like insurance and gold loans etc.
Fino Payments Bank IPO: Financials
| Particulars / (₹ In Cr) | June 20(3m) | June 21(3m) | 2021(12) | 2020(12) | 2019(12) |
| Net worth as stated | 153.68 | 131.92 | 150.55 | 130.07 | 162.11 |
| Total Income | 206.24 | 151.32 | 791.03 | 691.4 | 371.12 |
| Growth in Total Income (%) | 36.29% | – | 14.41% | 86.30% | – |
| Net Profit | 3.13 | 1.85 | 20.47 | -32.04 | -62.38 |
| Equity Share Capital | 44.58 | 44.58 | 44.58 | 44.58 | 44.58 |
| FV | 10 | ||||
| EPS (₹ ) | 0.4 | 0.24 | 2.62 | ||
| NAV (₹ ) | 19.7 | 16.91 | 19.3 | 16.67 | 20.78 |
| Equity Post IPO | 83.21 | ||||
| IPO Price | 577 | ||||
| EPS FY21 | 2.46 | ||||
| PE | 234.55 | ||||
| Market Cap | 4801 | ||||
| Market Cap / Sales | 6.1 |
Salient Points
- Largest and fastest growing diagnostic chain with dominant position in South India, well positioned to leverage the high growth in Indian diagnostics sector.
- Integrated diagnostics provider that offers one-stop solution at affordable price
- High brand recall and commitment to superior quality driving high individual consumer business share and customer stickiness
- Robust technical capability and state of the art technology with strong IT infrastructure
- Long track record of delivering consistent profitable growth, with strong cash generation and return metrics.
- Dedicated management team with significant industry experience.
Cons
- Significant portion of its operations are concentrated in the states of Telangana and Andhra Pradesh in south India.
- The diagnostics industry in India is highly competitive with several companies present in the market
- Group companies have been making losses.
Peers
| Players | Deposits (in ₹ Cr) | Net worth (₹ Cr) | CRAR % | Branches | Banking Touch points in millions |
| PayTM Payments Bank* | 3,450 | 480 | 62.40%* | 6 | 21.00# |
| India Post Payments Bank* | 855 | 570 | 79.20% | 650 | 0.14 |
| Airtel Payments Bank* | 596 | 320 | 90.20%* | 31 | 0.50^ |
| Fino Payments Bank | 251 | 150 | 54.84% | 54 | 0.72 |
| Jio Payments Bank* | 17 | 130 | 2.35% | 9 | NA |
| NSDL Payments Bank* | 7 | 140 | 230.00% | 1 | NA |
| Volume and Value of transactions, cards issued | ||||||
| Players | Debit cards outstanding (Cr) | Value of transaction at ATM & Pos | Volume of transaction at ATM & POS | |||
| Players | Apr-aug 21 | FY2021 | Apr-aug 21 | FY2021 | Apr-aug 21 | FY2021 |
| PayTM Payments Bank | 6.61 | 6.38 | 3,644 | 8,453 | 1.81 | 4.61 |
| India Post Payments Bank | 0.22 | 0.11 | 84 | 37 | 0.14 | 0.07 |
| Airtel Payments Bank | 0.2 | 0.17 | 170 | 269 | 0.18 | 0.45 |
| Fino Payments Bank | 0.29 | 0.23 | 1,181 | 1,712 | 0.44 | 0.69 |
| NSDL Payments Bank | 0.02 | 0.01 | 7 | 1 | 0.01 | 0.02 |
Fino Payments Bank IPO: Assessment
- Payments Banks focusing on increasing volumes, touchpoints with customers and cross sell to turn profitable.
- So far only PayTM Payments Bank and Fino Bank are profitable.
- The bank has become profitable in the fourth quarter of FY2020 and has been profitable in subsequent quarterly periods.
- Fino bank has nearly tripled the number of transactions on its platform from 154.02 million in FY2019 to 434.96 million in FY2021 and further recorded 123.38 million transactions in Q1FY2022.
- The gross transaction value has increased from Rs 45684.80 crore to Rs 132930.69 crore in FY2021 and recorded Rs 39035.99 crore in Q1FY2022.
- The operational risk in this business is quite less as merchants do all transactions. Fino Payments Bank is also not exposed to the credit risk associated with underwriting credit products as payments banks are not allowed to lend.
- Continued focus on use of technology to improve operating leverage.
- Augmentation of Bank’s Tier-I capital base through IPO will help the Bank’s future capital requirements.
- The Reserve Bank in early 2021 included Fino Payments Bank in the Second Schedule of the Reserve Bank of India Act, 1934. This status allows Fino to enhance its banking position in the treasury and participation in liquidity adjustment facility window
- The TTM EPS on post-issue equity works out to Rs 3.5 for the period ended June 2021. At the price band of Rs 560 to Rs 577, P/E is > 200 on the post issue equity and TTM EPS.
- Fino Payments Bank is offered at 5.9 times EV to sales.
- I will apply in Fino Payment Bank IPO only if there is quite strong QIB response to the IPO.
- Overall this IPO is risky as markets have been showing selling pressure and many IPOs are lined up.
- Payment banks is still a new concept, but overall Fino bank seems to be on track and should do well in long run.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in 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. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.