Equitas Small Finance Bank

IPO Details

Below are key details about the IPO of the Company

• IPO Start Date – 20th Oct 2020
• IPO End Date – 22nd Oct 2020
• IPO Price – INR 32 – 33
• IPO Lot Size – 450
• Minimum investment required – INR 14,400

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Business Details

Equitas Small Finance Bank was founded in year 2007 with focus on Microfinance. It is head quartered in Chennai but has operations in 15 states and union territories.It got approval from RBI for scheduled bank in year 2016. So it is a new bank with scheduled banking operation just 3 years old.The parent organization of the Company is Equitas Holdings. Parent Company got listed on exchanges couple of years back.

The Company offers Selfie account opening and selfie fixed deposit services which makes it digitally advanced bank. It is also offering 7% interest rate on fixed deposits which is excellent by any standard when you compare that at this moment other banks are offering in range of 5%.

Below are the services offered by the Bank as of this writing

• Savings Account
• Current Account
• Salary accounts
• Insurance Services
  • General Insurance
  • Life Insurance
  • Health Insurance
  • Pension
• Loans
  • Home Loan
  • Car Loan
  • Gold Loan
• Investment Services
• FASTag

The Company has however missed RBI guidelines of getting listed with in three years from commencement of operations. Along with that it was also fined 1 million INR for opening Insurance services without prior approval from the RBI. This two cases of rule violation does raised questions about the bank operations.

Below are some Cool stats about the Bank

• 854 Banking Outlets
• 322 ATM
• 2.63 million Borrower accounts
• 0.85 million deposit account
• 0.05 million current account
• 0.26 million savings account
• 0.54 million term deposits
• Gross NPA of 2.72%
• Largest small finance bank in India in Fiscal 2019 considering banking outlets
• 2nd largest small finance bank considering assets under management and total deposits

Financial Snapshot

Below are key financials of the Company for year ending 2020

• Total Income – 7509.68
• Profit for year – 576.71

IPO Subscription Status

Below is IPO Subscription status of the Company. I will be updating this section with time.

• QIB – 0.05 times
• NII – 0.05 times
• RII – 1.42 times
• Employee – 0.97 times
• Others – 0.24 times
• Total Subscription is 0.67 times

Below is meaning of the Key terms used above

• QIB is (Institutes or Mutual Funds like HDFC AMC etc)
• NII is (People bidding for more than 2 lakhs in IPO application)
• RII is (People bidding for less than 2 lakhs)
• Employee and Others are Reserved Quota Investors.

My Opinion

This is the third Small Finance bank to get listed on the Exchanges. The other two being Ujjivan Small Finance bank and AU Small finance bank. The parent Company have ont performed well on exchanges post listing so that is one thing you should look out for while analyzing this Company for post IPO holding.

I am bit worried out the penalty by RBI on opening the Insurance business before approval. This non compliance is something I do not like personally. Also the Corona have impacted financial space hard specially the Micro Credit ones because of impact on Low income group individuals and business.

It will be interesting to see the subscription statistics of the IPO in wake of above facts.