Capital Small Finance Bank makes weak market debut with up to 8% discount to IPO price

Capital Small Finance Bank shares made a poor debut on the stock exchanges on Wednesday, February 14. Capital SFB shares listed at ₹435 per share on BSE, reflecting a discount of 7% compared to the issue price. Around 32,000 shares changed hands in morning deals.

The stock made a lacklustre debut on NSE as well where the shares were listed at a price of ₹430.25 per share, reflecting losses of 8% from the IPO price. Around 3.68 lakh shares were traded on NSE in morning deals.

Capital Small Finance Bank had fixed the issue price at ₹468 per share following the closure of its ₹523 crore initial public offering this month.

Capital Small Finance Bank IPO share allotment was finalised on February 12 and the allotted shares were transferred to the demat accounts of successful bidders on February 13.

Capital SFB IPO: Offer size, price band and subscription

Jalandhar-based Capital Small Finance Bank hit the capital market on February 7 to raise around ₹523 crore to shore up its tier-I capital base to meet its future capital requirements. The bank aims to grow its loan portfolio and asset base which would require additional capital.

The IPO comprised a fresh issue of ₹450 crore and an offer-for-sale of 15,61,329 equity shares. The IPO was priced at ₹445-468 per share. The issue was open for subscription from February 7 to 9. The lot size was fixed at 32 shares.

The Initial Public Offering (IPO) of the company was subscribed four times on the final day of the offer on February 9. The IPO garnered bids for 3,26,04,288 shares against 81,47,373 shares on offer. The offer drew a huge interest from Qualified Institutional Buyers (QIBs) which placed 6.64 times bids against the shares on offer.

Non-institutional investors’ (NIIs) category also drew a subscription of 4.05 times. The retail individual investors (RIIs) portion was subscribed 2.49 times.

Oman India-backed Capital Small Finance Bank raised Rs 157 crore from anchor investors on February 6. Investors such as Ashoka India Equity Investment Trust, Nippon Life India, Whiteoak Capital, 360 ONE Mutual Fund, Edelweiss Tokio Life Insurance, ICICI Prudential Life Insurance Company, Kotak Mahindra,HDFC Life Insurance Company, and Ananta Capital Ventures Fund participated in the anchor issue.

Of the total 33,53,013 equity shares anchor portion, 16,02,592 equity shares or 47.80% were allocated to three mutual funds. Promoter group led by Sarvjit Singh Sarma and his family held 24 per cent pre-offer which has come down to 18.4%.

Oman India Joint Investment Fund II, American Capital, and Amicus Capital Private Equity pared their stakes in Capital SFB through the OFS. Oman India Joint Investment Fund II – the single largest external shareholder – had a 9.5 per cent stake. It sold 8,36,728 shares of its pre-issue holding.

Amicus Capital I held a 5 per cent stake. It divested 1,51,153 equity shares. Amicus Capital II sold 5,55,904 shares. PI Ventures, HDFC Life, ICICI Prudential Life, Sidbi and Max Life are among the external investors which did not participate in the OFS.

About Capital Small Finance Bank

The Jalandhar-based bank started operations in 2016 after changing itself from a local area bank. Prior to conversion, Capital Local Area Bank was one of India’s largest local area banks since January 14, 2000.

The small finance bank offers banking products in semi-urban and rural areas of the country. It offers farm loans, MSME and trading loans, housing loans and loans against property. The SFB gives loans only against collateral. The middle-income customers are the bank’s primary target group.

Capital SFB has a network of 173 branches and 175 ATMs in five states and one union territory. It has a presence in Delhi, Haryana, Rajasthan, Punjab, Himachal Pradesh and Chandigarh.

Capital SFB has a net bad loans ratio of 1.4. The company reported a net profit of ₹93 crore in the 2022-23 financial year while the same was ₹53 crore in the first half of 2023-24. Its revenue was ₹ 676 crore in FY23 against ₹578 crore in the FY22. The SFB’s net interest income rose at an annual rate of 17% and net profit at 32% in between FY21 and FY23. Gross non-performing assets (NPA) stood at 2.73% of total advances, while net NPAs were at 1.36% of total advances as of 30 September 2023.

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