Varanasi-based Utkarsh Small Finance Bank has received overwhelming response from investors for its initial public offering which closed with more than 100 times subscription last week. As a result, it maintained healthy premium in the grey market for a week now and ahead of listing next week.
The Rs 500-crore public issue of the small finance bank was subscribed 101.91 times during July 12-14. This was the second highest subscription number this calendar year after the Ideaforge Technologies IPO was subscribed over 106 times.
As is usually seen in blockbuster IPOs, qualified institutional investors took a lead and subscribed 125 times the allotted quota. The portion set aside for high net-worth individuals was subscribed 81.64 times, and that of retail investors 72.11 times, while employees, too, remained aggressive in bidding, as their part was booked 16.58 times.
The IPO comprises only fresh issues. The company plans to use the proceeds of the listing (excluding issue expenses) in augmenting the Tier - 1 capital base to meet future funds requirement.
The Utkarsh IPO shares were available with a massive 60 percent premium in the grey market, which indicates the possibility of a stellar listing on the bourses, analysts said on anonymity.
The grey market is an unofficial market in which IPO shares can be purchased and sold till the listing of the shares on bourses.
"Though the grey market premium of Utkarsh Small Finance Bank IPO is on the higher side, the company has all the right drivers in place to justify that valuation," Shreyansh Shah, research analyst at Stoxbox, said.
He said the company has a strong focus on the fast-growing and lucrative micro-finance industry, with the interest rate cycle in its favour. Additionally, the company has financial parameters at par with industry standards, with NIMs one of the best in the industry, he added.
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The company has a strong presence in North India which offers a great opportunity for growth. Moreover, the net proceeds from the issue is directed towards augmenting its Tier - 1 capital base, which provides further confidence about the company’s business prospects, Shreyansh said.
Utkarsh Small Finance Bank, which recorded the third fastest gross loan portfolio growth between FY19 and FY23 among small finance banks with gross loan portfolio of more than Rs 6,000 crore, has operations across India with presence in 26 States and Union Territories with 830 banking outlets and 15,424 employees, as of March 2023.
It has 3.59 million customers (both deposit and credit) majorly located in rural and semi-urban areas primarily in Bihar and Uttar Pradesh.
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The basis of allotment of IPO shares is going to be finalised by the end of July 19. Equity shares will be transferred to demat accounts of successful investors by July 21 and the refunds will be credited to bank accounts of unsuccessful investors by July 20.
Investors, who participated in the offer, can find their share allotment status either on the BSE website or the portal of the IPO registrar. The listing of the Utkarsh equity shares is scheduled on July 24.
This would be 14th listing on the bourses this year, among mainboard IPOs, after Senco Gold, Cyient DLM, Ideaforge Technologies, HMA Agro Industries, IKIO Lighting, Nexus Select Trust, Mankind Pharma, Avalon Technologies, Udayshivakumar Infra, Global Surfaces, Divgi TorqTransfer Systems, Sah Polymers, and Radiant Cash Management Services.
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