Capital Small Finance Bank IPO: 10 things to know before subscribing to Rs 523-crore issue

The price band for the issue has been fixed at Rs 455-468 per share.

Capital Small Finance Bank Limited is set to go public for raising to Rs 523.07 crore on February 7. The issue is a combination of a fresh issue of Rs 453 crore and an offer-for-sale of Rs 73 crore.

Here are the key details of the issue:

1.) IPO Dates

The IPO will open for subscription on February 7, 2024 and close on February 9, 2024.

2.) Price Band

The price band for the issue has been fixed at Rs 445-468 per share.

3.) Offer Details

The lender plans to raise Rs 523 crore through the issue and investors Oman India Joint Investment Fund II, and Amicus Capital are among the selling shareholders in the OFS.

Promotors have 23.96 percent shareholding in the company, and the balance 76.04 percent are held by the public shareholders including Oman India Joint Investment Fund II, Amicus Capital, HDFC Life Insurance Company, ICICI Prudential Life Insurance Company, Small Industries Development Bank of India, and Max Life Insurance Company.

4.) Objectives of the Issue

Funds raised through the fresh issue component will be mainly utilised for augmenting the bank's Tier–I capital base to meet future capital requirements.

5.) Lot Size

Bids for the IPO can be made for a minimum of 32 equity shares and in multiples of 32 shares thereafter. Therefore, retail investors can invest a minimum of Rs 14,976 for 32 shares, and their maximum investment will be Rs 1,94,688 for 416 shares, as they cannot exceed the investment limit of Rs 2 lakh for the IPO.

6.) Company Profile

In 2015, Capital SFB became the first non-NBFC microfinance entity to receive the Small Finance Bank (SFB) license. The company has established a robust presence in semi-urban and rural areas, employing a branch-based operating model. Starting with 47 branches, it has now expanded to more than 172 branches across Delhi, Haryana, Rajasthan, Himachal Pradesh, and the Union Territory of Chandigarh.

7.) Financials of the Company

In Q1 FY24, Capital Small Finance Bank recorded a 15.6 percent growth in total business at Rs 12,583.68 crore. The bank reported a profit after tax of Rs 30.10 crore, compared to Rs 18.28 crore in the same period last year.

Total income increased to Rs 202.29 crore from Rs 162.91 crore. As of June 2023, total advances were Rs 5,519 crore, and deposits stood at Rs 7,064.35 crore, with a 40.04 percent share of current and savings deposits. Non-performing assets improved, with gross and net NPAs at 2.81 percent and 1.37 percent, respectively.

8.) Lead Managers

Nuvama Wealth Management Limited, Dam Capital Advisors Ltd (Formerly Idfc Securities Ltd) and Equirus Capital Private Limited are the book-running lead managers of the Capital SFB IPO, while Link Intime India Private Ltd is the registrar for the issue.

9.) Key Risks

i.) The bank's business is currently significantly dependent on operations in rural and semi-urban areas and any adverse developments in the banking and finance sector in these areas could adversely affect business, financial condition, results of operations and cash flows.

ii.) The bank's business is concentrated in North India, with approximately  149 branches out of a total of 173 branches, as of September 30, 2023, located in the state of Punjab. Any adverse change in the economy of North India could hurt the financial condition and cash flows of the lender.

iii.) The bank is involved in certain legal proceedings, any adverse developments related to which could adversely affect its reputation, business and cash flows.

10.) Listing Date

Capital SFB IPO will likely list on BSE, NSE with a tentative listing date fixed as Wednesday, February 14, 2024.