Suryoday Small Finance Bank made a listless debut at the bourses on March 26 as the share price of the company settled at a 9.4 percent discount to the issue price despite the positive trend in secondary market. As per experts, concerns over asset quality and tepid IPO subscription are the major factors behind the stock's lacklustre performance.
The stock settled at Rs 276.20 on the BSE, down by Rs 28.80 against the issue price of Rs 305, with volume of 5.08 lakh equity shares.
On the National Stock Exchange (NSE), it fell 8.92 percent to close at Rs 277.80, with volume of 41.72 lakh equity shares after hitting an intraday high of Rs 296.35 and low of Rs 255.
The opening price on the BSE was at Rs 293 and on the NSE, it was at Rs 292.
"For small finance banks (SFBs), the year has been tough because of the pandemic. If we talk about valuations, the IPO seemed reasonably priced as the company has very strong fundamentals. It has one of the highest net interest margins (NIMs), return on assets (RoA), and a strong deposit growth," Gaurav Garg, Head of Research at CapitalVia Global Research told Moneycontrol.
Garg feels the performance of IPO on the listing day can also be attributed to the recent selling pressure in the financial services sector.
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Investors with a long-term outlook in the company can continue to hold on to their shares as the company seems to be appropriately placed among its peers, he advises.
Suryoday reported strong growth in net interest income of 72.1 percent CAGR between FY18-20 though 9MFY21 numbers were adversely impacted due to the COVID-19 pandemic.
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Suryoday Small Finance Bank has mobilised Rs 582.34 crore through public issue at a price of Rs 305 per share. The net fresh issue money (out of gross proceeds of 248.58 crore) will be utilised for augmenting the bank's Tier-1 capital base to meet the bank's future capital requirements, while the offer for sale (Rs 333.76 crore) received by selling shareholders.
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