Suryoday SFB Listing Strategy: Suryoday Small Finance Bank’s IPO subscription of 582 crores has been closed and it has subscribed 2.37 times. Its shares will be listed on March 30. Investors, who will be allotted shares, will have two options to hold it or take advantage of listing gains. According to market experts, as its IPOs are at a premium, the investor should book a profit on the listing gain and consider an investment strategy in other private banks or other small finance banks that have a good growth record. Suryoday is SFB’s loan portfolio diversified and also provides non-micro banking loans and is operational in 13 states and union territories of the country.
The situation has improved in the case of gross NPAs and net NPAs
Sunrise SFB posted a profit of Rs 54.8 crore in the third quarter of October-December 2020 of the current financial year. In December 2020, its advance was Rs 3800 crore and a customer base of 14.4 lakh. As of December 2020, the cost of its funds has come down to 8.05 per cent as compared to 10.7 per cent in FY 2018. Its gross NPA was 3.15 per cent in FY 2018, which declined to 0.78 per cent in December 2020, and in FY 2018, it was 1.86 per cent, which was 0.33 per cent in FY 2018. In Gross NPA, all the default loans come while the provision amount is removed from the default loan in Net NPA.
Invest in another SFB or private bank by booking profits
Its IPO has been valued at 2.7x times the book value in December 2020, at a 30–35 per cent premium compared to Ujjivan SFB and Equitas SFB. Reported GNPA is 0.78 per cent in December 2020 but Proforma GNPA is 9.28 per cent and NPA is 5.38 per cent which is higher than other peers. In such a situation, its profitability can be reduced. Apart from this, due to the premium value, the returns of investors can also be affected.
According to Vikas Jain, senior research analyst at Reliance Securities, investors should book profits on listing gains and can invest in other private banks. Apart from this, investors can also invest in such a small finance bank which has values comparable to long term averages and has a good record of growth.
Subscription was open for three days
Under the IPO of Suryoday Small Finance Bank, the lot size was 49 shares, that is, at least 49 shares had to be bid. The price band for the IPO was fixed at Rs 303-305 per share. The upper price band was to be charged at least Rs 14,945 in terms of Rs 305. After this, bids could be made for a maximum of 13 lot sizes i.e. a maximum investment of Rs 194285 could be made. The IPO opened on 17 March and closed on 19 March. The proceeds from the Suryoday Small Finance Bank IPO will be used for future capital needs.