Suryoday Small Finance Bank IPO: Opening date, price band, listing to valuation - highlights by Ventura Securities

Suryoday Small Finance Bank IPO: The Listing will happen on BSE & NSE. The Open Date will be on 17 Mar 2021 and Close Date is on 19 Mar 2021. The Price Band is Rs 303-305. The Market Lot is of 49 shares for Minimum Lot 1 and the multiple thereof.

Suryoday Small Finance Bank incorporated on 10th November 2008, is among the leading SFBs in India in terms of net interest margins, return on assets, yields and deposit growth and had the lowest cost-to-income ratio among SFBs in India in Fiscal 2020.

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Suryoday Small Finance Bank currently offers a variety of asset and liability products and services designed for inclusive finance and general banking customers.

The bank’s asset products consist of:

Inclusive finance portfolio
Commercial vehicle loans
Affordable housing loans
Micro business loans
Unsecured micro and small enterprise
Small and medium enterprise loans, secured business loans, financial intermediary group loans
Other loans

Suryoday Small Finance Banks Gross Loan Portfolio has grown at a CAGR of 46.98% from Rs 1717.78 cr as on 31st March 2018 to Rs. 3,710.84 cr as on 31st March 2020 and stood at Rs 3908.23 cr as on 31st December 2020. Going forward, we expect the net advances to grow by 17.9% CAGR for the period FY20-FY23 to Rs 5794.2 cr. ‘

Suryoday Small Finance Bank Deposits are expected to grow by 28.9% CAGR for the same period to Rs. 6,099.1 cr as a result of the bank’s focus on building granular retail deposits. NIMs are expected to rebound to 9.6% from the current 8.5% (9MFY21) as the bank releases the excess liquidity held by it. PAT is expected to grow by 20% CAGR for the period FY20-FY23 to Rs 19.5 cr aided by a lower cost to income ratio of 46.7%.

GNPA and NNPA levels are expected to remain elevated for the current year due to the impacts of moratorium and stress in the micro finance segment. GNPA and NNPA for FY23 are expected to settle at 3.2% and 1.5%.

Customer centric approach with a focus on financial inclusion:

As of December 31, 2020, the bank served 1.44 mn customers and in the period between FY18 to FY20, its customer base increased by 0.65 mn. The bank’s inclusive finance portfolio accounted for 70.35% of its Gross Loan Portfolio, as of December 31, 2020

Diversified asset portfolio with a focus on retail operations:

Over the years, the bank has been able to diversify its product portfolio to ensure that the proportion of its net unsecured portfolio has been reduced from 94.81% of its net advances in FY18 to 77.49% in FY20 and further to 74.59% in the nine months ended December 31, 2020.

Suryoday Small Finance Bank Valuation:

At the higher price band of Rs 305 per share, Suryoday Small Finance Bank is valued at 1.7X FY23 P/BV.