Suryoday Bank IPO Review – Check GMP, Financials Details, Price, Lot In 5 Easy Steps

  • Post last modified:March 16, 2021
  • Post category:Stock Market
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Suryoday Bank IPO is getting launched for subscription on Wednesday 17, March 2021, and will be available for subscription till Friday, March 19, 2021. The company is looking to raise Rs.582.33 crore through public issue in an Offer for Sale of 1.09 crore.

Suryoday Small Finance Bank (SSFB) initial public offer comprises fresh issue of 81.50 lakh shares, moreover the OFS comprises sale of shares by following shareholders:

  1. International Finance Corp: Up to 48.37 lakh equity shares
  2. Gaja Capital Fund II Ltd: Around 20 lakh equity shares
  3. DWM (International) Mauritius Ltd: 18 lakh shares
  4. HDFC Holdings Ltd: 7.5 lakh shares
  5. IDFC First Bank: 1.5 lakh shares
  6. Americorp Ventures Ltd: 1 lakh shares
  7. Kotak Mahindra Life Insurance Company: 1.86 lakh shares
  8. Gaja Capital India AIF Trust: 1.06 lakh shares

 

The equity shares of Suryoday IPO are proposed to be listed on both BSE and NSE.

The Suryoday Bank IPO issue will be sold in the price band of Rs. 303-305 per share and the minimum lot quantity is 49 shares and in multiples thereof translating to a minimum investment of Rs 14,954.

The latest Grey market premium price (GMP) for Suryoday Bank IPO’s were seen up by more than 21.37% and were trading around Rs.368 as of today, This means people are expecting it to open on listing day to be at least at Rs.350 or more.

Having said that, I would like to add here that many people underestimated Stovekraft IPO before it’s launch, however the share price made a high of Rs.545 above the pre-open IPO price band of Rs.384.

Likewise for HFFC (Home first finance) IPO, the GMP before launch was at about Rs.650 however the stock got listed at Rs.540 (This was Recommended by Famous Business news Anchor? ) on the other hand for IRFC IPO many people recommended a BUY and GMP were also seen at quite high range but unfortunately it open at a discount price and is currently trading at Rs.25.40. 

There are many such examples of IPO’s doing just opposite of Grey market premium price. GMP does not mean in anyway a recommendation for an IPO, the financials of a company and its future prospectus tells a lot.

GMP works similar like a bookie bets on a match before its been played on ground, the result may go in any favor.

Here is the thing no one can tell you whether the IPO will going to make a stellar debut or not, it is you who have to decide based on available information about the company.

Moreover the IPO’s now a days are very hot market every one wants to earn some quick money on listing day itself and there is nothing wrong about it.

Having said that, one must not forget to check the financials and do not fall for any recommendation from anyone, it is you hard earned money, you should decide whether to opt for the IPO or not.

You may watch various YouTube channels or read on different websites about recommendation for stocks and IPO, it is my humble suggestion and request please do not ever fall prey to it. Better than this is to invest in ETF’s?.

Therefore, whenever you are buying IPO make sure the money invested is not the one which you my need it urgently, always use extra money which you may not require in near future, Otherwise stay away completely.

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Now, coming back to the Suryoday Bank IPO let us talk about in brief about the company and its financials and other details step by step.

 



 

About Suryoday Small Finance Bank (SSFB):

Suryoday Small Finance Bank earlier known as Suryoday Micro Finance Private Limited, founded and promoted by Baskar Babu Ramachandran, Ganesh Rao and V. L. Ramakrishnan in 2008. It was granted a small finance bank license in 2016. A year later in 2017, it started commercial operations as per the RBI’s guidelines.

About Suryoday Small Finance Bank (SSFB):

Since inception they have are aggressively expanding their presence across India. Headquartered in Navi Mumbai, Maharashtra, they have 477 banking outlets (powered by 4,695 employees) spanning 12 States and Union Territories. 

They are are among the 10 companies and the only one from Maharashtra to obtain a ’Small Finance Bank’ licence from the Reserve Bank of India (RBI). Their endeavour is to bring the best banking solutions to the ‘banked’, ‘under-banked’ and the ‘un-banked’ sections of the society. 

In March 2019, they raised 248 crores from various institutional investors and onboarded two new investors viz. a development finance institution – ‘DEG’, a subsidiary of Germany’s KfW Group, and Kotak Mahindra Life Insurance Company Ltd.

In May 2020, they raised Rs.62 crores from five of their existing investors, namely Gaja Capital, Kotak Mahindra Life Insurance Company, Lok Capital, Teachers Insurance and Annuity Association (TIAA), and Kiran Vyapar. IDFC First Bank, Kotak Mahindra Life Insurance and Americorp Ventures Limited are also investors in Suryoday.

Apart from providing core banking services, currently they offer a variety of asset and liability products and services designed for inclusive finance and general banking such as :

  1. Inclusive finance portfolio [comprising loans to joint liability group (JLG) customers],
  2. commercial vehicle loans,
  3. affordable housing loans,
  4. micro business loans,
  5. unsecured MSME and SME loans,
  6. secured business loans,
  7. financial intermediary group loans and other loans.

The listed industry peers of Suryoday Small Finance Bank are Ujjivan Small Finance Bank, Credit Access Grameen Ltd, Spandana Sphoorty Financial Ltd, Bandhan Bank Ltd and AU Small Finance Bank.

Suryoday is amongst the leading SFBs in India in terms of NIMs, RoA, yields and deposit growth and the lowest cost-to-income ratio. The management quality of the company is very good and it also has good backing from institutional investors. 

They are leading players in the life and general insurance sectors, along with several government schemes to distribute their products at their banking outlets. Their digital banking facilities include internet/mobile banking, Aadhaar biometric Identification system, paperless loan processing and NPCI’s payment systems.

Below image shows the Asset Under Management (AUM) for Suryoday bank and its peers:

 

Suryoday Bank IPO Review - Check GMP, Financials Details, Price, Lot In 5 Easy Steps
Top 3 players accounted for 63% of industry AUM as of fiscal 2020

 

Suryoday Bank Ratings by Agencies:

Agency Category Rating
ICRA NCD/Sub-Debt A(Stable)
ICRA CD Rating A1+
CRISIL CD Rating A1+

Let us now move on to know the financials of the Suryoday Small Finance Bank (SSFB) in great detail.

 



 

Financials Of Suryoday Small Finance Bank (SSFB):

Suryoday Small Finance Bank posted a profit of Rs 54.8 crore for the quarter ended December 31,2020. In FY 2019-20, total income increased 43.1% to 854 crores. Net interest income grew 44.8% to 491 crores. In third full year as an SFB, Suryoday continued to achieve critical mass in deposit base which grew 78.8% to 2,849 crores.

 

Financials Of Suryoday Small Finance Bank (SSFB):

 

 

They continue to focus on expanding their asset base ending the year with 3,711 crores of AUM recording a growth of 24.9%.  The profit before tax for the year ended March 31,2020 at 154 crore showed a 11% increase over the previous year and the profit after tax at 111 crore improved by 28% as compared to the previous year.

 

Financials Of Suryoday Small Finance Bank (SSFB):

 

The net interest income for the year was at 491 crore as compared to 339 crore in the previous year registering a 45% increase. The Capital Adequacy Ratio (CRAR) was 29.6 % as at March 31, 2020 as compared to the minimum required 15%. 

 

Financials Of Suryoday Small Finance Bank (SSFB):

 

Return on assets (RoA) declined from 3.2% in FY19 to 2.6% in FY20. Decline in ROA is primarily on account of higher provisioning on account of COVID related impact on the business of the Bank. The number of banking outlets increased from 382 in March 2019 to 477 in March 2020 including 133 Unbanked Rural Centres.

 

Financials Of Suryoday Small Finance Bank (SSFB):

 

As of March 31, 2020, Suryoday Bank’s gross Non-Performing Assets(NPAs) was 2.79% of gross advances, and net NPAs was 0.57% of net advances. However, the bad loan ratios remained low largely because of the Supreme Court’s interim order in the interest-on-interest case, where banks were not allowed to recognise fresh bad loans after Covid-19.

 

 

Total assets increased by 42.62% from 37,614.64 million as of March 31, 2019 to 53,645.22 million as of March 31, 2020. This increase was primarily due to an increase in advances by 31.81% from 26,795.84 million as of March 31, 2019 to 35,319.45 million as of March 31, 2020.

 



 

Above points shows the Suryoday Bank does have a strong financial track record which is great for any Bank or company.

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Suryoday Bank Peers Comparison:

Ujjivan SFB, CreditAccess Grameen, Spandana Sphoorty, Bandhan Bank and AU SFB are Suryoday Bank listed peers. The P/BV was 2.28 which seems to be reasonable with respect to its peers on the basis of data as on Dec, 2020.

 

Suryoday Bank Peers Comparison

 

  1. Suryoday SFB has the third highest deposit growth rate Suryoday SFB, Jana and Fincare recorded the fastest on-year deposit growth of 79%, 130% and 138%, respectively, in Fiscal 2020, followed by ESAF and Ujjivan SFB.
  2. Suryoday and Ujjivan SFB are well capitalized compared to peers As of end-Fiscal 2020, Suryoday and Ujjivan SFB had a total capital adequacy ratio of 29.57% and 28.80%, respectively, compared with Capital SFB’s 17.47% and Jana SFB’s 19.30%.
  3. Suryoday SFB has the third highest proportion of retail term deposits in total deposits
  4. Suryoday SFB has the third highest proportion of retail term deposits to total deposits at 43% among its peers
  5. Suryoday SFB has the second highest 3-year AUM growth rate
  6. Suryoday SFB and ESAF recorded the fastest three-year CAGR of 64% and 66%, respectively, in Fiscal 2020. They were followed by Utkarsh and Fincare SFB
  7. Suryoday has the second highest RoA amongst SFBs
  8. Suryoday has the second highest return on assets (ROA) at 2.4%. Fincare had the highest ROA at 2.5%, followed byUtkarsh SFB (2.4%) in Fiscal 2020. Jana SFB and, Capital SFB had the lowest RoA among SFBs. Amongst MFIs, Spandana had the highest RoA of 6.5% in Fiscal 2020

 

The highest industry P/E stands at 31.90x  and the lowest at 10.13, whereas, the average industry P/E is 20.97. Suryoday Bank investors issue price is almost in-line with the unlisted (Pre-IPO) market which is good news.

Looking at the valuation with its peers, the ipo can be counted as slightly overpriced after seeing the EPS, P/BV and NAV for last 3 fiscal years, but one need to count in Covid and its affect too.

 



 

Suryoday Bank IPO Details:

 

Suryoday Bank IPO Details

 

Object Of the Offer:

The Small Finance Bank has proposed to utilize the net proceeds from the fresh issue towards augmenting the Suryoday Small Finance Bank’s Tier – 1 capital base to meet its future capital requirements.

Issue Break-up:

Not more than 50% of the net issue will be reserved for qualified institutional investors (QIBs), 35% of the portion for retail investors and not less than 15% for non-institutional investors. Along with this, 5 lakh equity shares will be reserved for eligible employees with an discount price of 30 per share.

 

Frequently Asked Question (FAQ):

1.What Is The Symbol For Suryoday Bank IPO? 

Ans: The Symbol for Suryoday Small Finance Bank (SSFB) is SURYODAY

2.When Suryoday Bank IPO Coming?

Ans: The Issue Period for Suryoday Bank IPO is 17-Mar-2021 to 19-Mar-2021.

3. Post Modification Period For Suryoday Bank IPO?

Ans: The Post issue Modification Period for IPO is 22-Mar-2021 (10.00 A.M. to 11.00 A.M.).

4. What Is The Cut-off Time Period For UPI Mandate For Suryoday Bank IPO?

Ans: The Cut-off time for UPI Mandate Confirmation is 22-Mar-2021 (upto 12:00 PM).

5. What Is The Issue Type For Suryoday Bank IPO?

Ans: The Issue Type is 100% Book Building.

6.What Is The Price Band For Suryoday Bank IPO?

Ans: The Price (Band) Range for Suryoday Bank IPO is Rs.303 to Rs.305 per equity share.

7. What Is The Lot Size For Suryoday Bank IPO?

Ans: The Bid Lot i.e. Minimum Order Quantity (lot size) for Suryoday Bank IPO is of 49 Equity Shares and in multiples thereof 49 Equity Shares.

8. Who Are The Book Running Lead Managers For Suryoday Bank IPO?

Ans: The Book Running Lead Managers are, Axis Capital Limited, ICICI Securities Limited, IIFL Securities Limited, SBI Capital Markets Limited

9. What Is The Face Value For Suryoday Bank IPO?

Ans: The Face Value is of Rs.10 whereas The Tick Size is of Rs.1

10. What Is The IPO Market Timings For Suryoday Bank IPO?

Ans: The IPO Market Timings is 10.00 a.m. to 5.00 p.m.

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Apart from above points:

The Maximum Subscription Amount for Retail Investor is Rs. 2,00,000

The Maximum Subscription Amount for Employee is Rs. 5,00,000 (Rs.30 Discount Per equity share*)

The Name of the Registrar is Kfin Technologies Private Limited

The Contact person name number and Email id is Mr. M Murali Krishna, 040 3321 100, [email protected]

The Address of the Registrar is Selenium Tower B, Plot 31 & 32, Gachibowli,Financial District, Nanakramguda Serilingampally,Hyderabad 500 032,Telangana, India

 



 

Where To Check Suryoday Bank IPO Application And Allotment Status?

As an investor or trader generally we are curious and anxious to know the results of the application as soon as possible. To ease the anxiety, both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have come up with dedicated pages and links which investors can use.

NSE

The NSE has an IPO bid verification module. It can be used to verify the IPO application details uploaded on the exchange bidding system by your member/bank. The data of the bid details uploaded by the member/bank would be available on T+1 day (where T would be date receipt of bid on NSE platform).

In addition, the data would be available until six days after the issue closure date. This gives the investor enough time to verify the data and instruct the member/bank to make any changes, if required.

Exchange will also provide allotment information as provided by the registrar to the issue.

An investor can avail this facility by registering using his/her PAN details. After registration, the investor will receive an email notification from NSE on the registered email address. That email will provide the login details.

The following link can be used for the same:

https://www.nseindia.com/products/dynaContent/equities/ipos/ipo_login.jsp

BSE

The BSE has also come up with a similar platform.

This unique facility allows investors to verify the status of their application submitted to a Trading Member or a SCSB (Self-Certified Schedule Banks).

The investor can check his application status/information on the website until one week after issue close.

The following link can be used by investors:

https://www.bseindia.com/investors/appli_check.aspx

 

Important Things To Keep In Mind Before Applying For IPO’s:

  • Try to fill for the same IPO online from different DP ID i.e. if in your family have more than 1 account you can possibly get the allocation done in case of over subscription.
  • You should have a good knowledge of the sector and the company you are planning to invest.
  • Analysis of the company’s balance sheet is very crucial. A clear understanding of the company’s future projects and vision is very necessary to know whether it will have a sustainable future.
  • Investment decision has to be taken carefully and not in a hurry.
  • Read as much as you can about the company, its objectives for launching the IPO, its past history in business and its futures prospectus.
  • Don’t go for hype in the news, your analysis should be based on facts rather than gossips and rumors.
  • Many IPOs are oversubscribed. What this means is that the demand for shares is much higher than the shares available for sale. In such a situation, it is no surprise that many investors fail to get any shares allotted to them. This is why it is advisable to apply for IPO shares on the last day of bidding. This way, one can have a good estimate on how large the subscription will be. Also, in that case, one should bid for just one lot and not unnecessarily lock up their capital.

 

Conclusion:

As of March 31, 2020, the microfinance industry had grown at a CAGR of 24% since Fiscal 2017. In Fiscal 2020, the industry grew by 16% to amount to ₹ 3.3 trillion in March 2020. In light of COVID-19 outbreak, the microfinance sector is expected to find it challenging in the current Fiscal 2021.

Overall growth of microfinance sector is expected to remain subdued in the current fiscal to amount to ₹ 3.5 trillion owing to high sensitivity of the sector towards external shocks.

However, the domestic microfinance industry has shown resilience towards external shocks in the past and is expected to gain momentum in the next two fiscals covering the least penetrated

Let us now check some of the strength and risk associated with Suryoday Small Finance Bank

Some of the qualitative factors and strengths of

  1. Customer centric approach with a focus on financial inclusion
  2. Diversified asset portfolio with a focus on retail operations
  3. Fast evolving granular deposit franchise
  4. Leveraging emerging technologies to enhance digital footprint
  5. Strong credit processes and robust risk management framework
  6. Track record of strong financial performance and cost efficient operations
  7. Multiple distribution channels
  8. Experienced leadership team, professional management and strong corporate governance

 

Some of the Risk Factor for

  1. Suryoday Bank directors are involved in certain legal proceedings which can serve as a hindrance to its image and its future operations.
  2. Although Suryoday’s product portfolio is diversified, its customer base isn’t. Its customers in Maharashtra, Tamil Nadu and Odisha comprised 33.42%, 27.69% and 15.96% of its loan advances respectively. Any changes in the market in these areas can have a significant impact on Suryoday’s operations.
  3. The deposits from the top 20 clients made up about 38.77% of the total deposits of the company as of 2020. If these customers had a change of heart and decided to take their business elsewhere, Suryoday would certainly feel the impact.
  4. Apart from that, the competitive landscape in the small finance banking industry imposes significant pressure on Suryoday. It already has a very small market share. If its business should drop even a little bit for any reason, the other competitors would scoop in and capture the market share.

 



 

Therefore, it is always advisable to go through Suryoday Bank IPO – RHP to know in detail about the company.

The only thing which should be bothering you is the research you did before applying for the IPO. Investing in IPO is risky as well as profitable. Having said that you also need to keep in mind important things mentioned above before applying to IPO’s as the risk is always involved.

For More Information Do Checkout Basics of IPO and FAQ Here.

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Note: Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only and intended to give information. All investments are subject to risks, which should be considered prior to making any investments. The above details are compiled from information available on public platforms. These are not buy or sell recommendations.

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