Utkarsh Small Finance Bank IPO booked 4.73 times, retail portion 13.75 times on Day 1

The public issue involves a new offering of equity shares totalling up to Rs 500 crore. The company plans to use the net proceeds from the offering to strengthen the bank's Tier-1 capital base in order to meet future capital needs resulting from the growth in its loans and advances.

The Utkarsh Small Finance Bank (SFB) public offer received bids for 57.07 crore shares against an issue size of 12 crore units, subscribing 4.73 times on the first day of bidding today, exchange data showed. The IPO will close on July 14.

Retail investors have bought 13.75 times their allotted quota and employees have subscribed 2.73 times. As many as 21 lakh shares have been reserved for employees of which 50 lakh shares have been booked, Bombay Stock Exchange (BSE) data showed.

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The part set aside for qualified institutional buyers was subscribed 4 percent. The non-institutional portion of the IPO has been subscribed 8.25 times, with bids received for 29.6  crore shares, against the reserved portion of 3.2 crore shares.

Several brokerage firms have been upbeat on the prospects of the bank before the launch of the IPO. Reliance Securities recommended 'subscribe' to the public issue because it believes that the bank is in constant efforts to improve its business with deeper insights into customer trends and develop customised products for its various user segments.

Nirmal Bang in its IPO note has said that Utkarsh has managed to reduce its exposure to the unsecured micro banking segment from 82 percent in FY21 to 66 percent in FY23 which has derisked its business model. "We expect this trend to continue," the broking firm said.

BP Wealth in its report on the bank said Utkarsh has strong asset quality and consistent financial performance. The firm recommends 'subscribe' on the back of a robust growth story.

Utkarsh SFB was incorporated as an NBFC in FY10 with core focus on microfinance loans to underserved segments and in particular in Uttar Pradesh and Bihar.

The public issue involves a new offering of equity shares totalling up to Rs 500 crore. The company plans to use the net proceeds from the offering to strengthen the bank's Tier-1 capital base in order to meet future capital needs resulting from the growth in its loans and advances.

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