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Equitas Small Finance Bank IPO Review, Issue Details

Equitas Small Finance Bank IPO Review

The Equitas small finance bank was incorporated in the year 1993. In Fiscal 2019, the Madras based bank was the largest small finance bank in India considering banking outlets. And also it is the 2nd largest small finance bank considering assets under management and total deposits. From this article, you will get to know about Equitas Small Finance Bank IPO Review, company details, and all. Let’s have a look at the issue details of the company.

Issue Detaila of Equitas Small Finance Bank

IPO Date
Issue TypeBook Built Issue IPO
Issue Size
Fresh Issue[.] Eq Shares of ₹10
(aggregating up to ₹280.00 Cr)
Offer for Sale72,000,000 Eq Shares of ₹10
(aggregating up to ₹[.] Cr)
Face Value₹10 per equity share
IPO Price[.] to [.] per equity share
Market Lot
Min Order Quantity
Listing AtBSE, NSE
DRHP

About the Company

  • The bank has a diversified loan portfolio and also less dependence on microfinance business. This is quite different from the other microfinance companies.
  • Equities small finance bank focuses mainly on financially unserved and underserved customers. Besides this, the bank also offers a wide range of banking products and services.
  • The company gives microfinance loans. The loans promote financial inclusion, housing finance, vehicle finance, as well as MSE finance.
  • They offer financial products as per their customers’ income profile, type of security available, and nature of business.
  • Besides the above, the company also gives current accounts, salary accounts, savings accounts, other deposit accounts, ATM-cum-debit cards, mutual fund products, third party insurance, and issuance of FASTags.
  • They follow credit assessment procedures through a risk management framework. It is analyzed by its Risk Management Committee.
  • As per the report of 30th Sep 2019, the company has the largest distribution channel among Small Finance Banks (SFBs). It includes 853 Banking Outlets and 322 ATMs in India across 15 states and union territories.

Competitive Strengths

1. It is a customer-centric organization along with a focus on the unserved and underserved segment
2. A well-diversified asset portfolio as SFB
3. Strong retail liability portfolio
4. Credit assessment procedures

Objects of the Issue:

The bank proposes to utilize the Net Proceeds from the fresh issue offer towards augmenting the Bank’s Tier I capital base to meet the future capital requirement.

Company Promoters:

Equitas Holdings Limited is the promoter of the company.

Equitas Small Finance Bank Risk Management Framework

Based on their experience, they apply different credit assessment procedures for their product segments, which is guided by their risk management framework, and supervised by their Risk Management Committee.

They believe that their risk management framework together with their experience of dealing with unserved and underserved customer segments has helped them contain their NPA levels, and improve their credit ratings, which has allowed them to access capital from banks and financial institutions at competitive rates.

Equitas Small Finance Bank – Network of Banking Outlets

As of March 31, 2019, they had the largest network of banking outlets among all SFBs in India (Source: CRISIL Report). As of September 30, 2019, their distribution channels comprised 853 Banking Outlets and 322 ATMs across 15 states and union territories in India.

They also distribute products through digital channels, and leverage technology to identify opportunities to better serve their target customer segment. To this end, they have introduced facial recognition features for transaction authentication in their mobile banking application.

Equitas Small Finance Bank – Asset Products

They categorize their asset products into (i) small business loans; (ii) microfinance; (iii) vehicle finance loans; (iv) MSE finance; (v) loans to corporates; and (vi) other loans. Categorization is largely determined by customer profile, type of security and enduse.

Equitas Small Finance Bank Limited: Business strategies

  • Leveraging on their existing network for deepening penetration and driving operational efficiency
  • Strengthen liability franchise and focus on increasing their retail base to further improve cost of funds
  • Leverage data for analytics to drive operational efficiency
  • Continue to focus on digital products and technology to grow operations
  • Continue to diversify product offerings and leverage cross-selling opportunities
  • Increasingly focus on non-interest income sources

Company Financials:

ParticularsFor the year/period ended (₹ in Million)
30-Sep-19 (for 6 months)31-Mar-1931-Mar-1831-Mar-17
Total Assets172,124.63157,626.91133,011.5092,501.28
Total Revenue13,659.3923,948.3217,729.0312,126.98
Profit After Tax1,065.392,105.66318.311,041.34

Equitas Small Finance Bank IPO Review

We will get back to the review, once the issue details will be released.

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