Utkarsh Small Finance Bank IPO: Issue subscribed over 100 times on final day; QIB portion most booked

The initial public offering (IPO) of Utkarsh Small Finance Bank continued to attract strong investor demand on Friday. The Rs 500-crore issue, which concluded today, was subscribed 101.91 times. Utkarsh SFB is the second IPO this year that received more than 100 times subscription. Before this, IdeaForge Technology was subscribed 106.06 times last month. Subsequently, the stock made a stellar market debut, delivering a listing pop of 94 per cent.

In the grey market, Utkarsh SFB shares were last seen trading at over 60 per cent premium against its issue price of Rs 25, suggesting a strong Dalal Street debut. The stock is likely to get listed on July 24.

Utkarsh SFB received 12,28,46,22,600 bids compared to the issue size of 12,05,43,477 shares, BSE data showed. The quota for qualified institutional buyers (QIBs) saw the maximum push and was booked 124.85 times. The non-institutional investor (NIIs) category fetched 81.64 times of the total bids. The portion reserved for retail investors was booked 72.10 times and the employee reserved category got 16.58 times subscription.

The IPO was entirely a fresh sale of 20 crore equity shares and investors can make a bid of a minimum of 600 equity shares and its multiples thereafter.

Brokerages have given 'Subscribe' rating to the IPO with a long-term view, citing its attractive pricing. Although, an analyst also suggested booking profits on the listing day if the gains are above 25 per cent.

"At higher price band (Rs 25), the stock is valued at 1.8(x) P/BVPS with current book value per share of Rs 18. We recommend 'Subscribing' to the issue," said LKP Securities.

Arihant Capital Markets assigned a 'Subscribe for Long term' rating. "The company has displayed exceptional performance in FY23 and stands strong among its competitors with the highest liquidity coverage ratio and second lowest net NPA (non-performing asset) in FY23," it said.

Canara Bank Securities gave a 'Subscribe' tag. "The issue is available at P/BVPS of 1.12 times, which is lower as compared to peer competitors; however, performance of net interest margin in future as it could see pressure due to increase in cost of funds," it stated.

"We recommend investors 'Subscribing' to the issue with a long-term perspective as well as healthy listing gains. With optimistic market sentiments, if investors get any listing gains over and above 25 per cent, we recommend booking profits on the said day," said Rajan Shinde Research Analyst at Mehta Equities.

ICICI Securities and Kotak Mahindra Capital are the book-running lead managers to the issue, while Kfin Technologies has been appointed as the registrar.

The Varanasi-based firm has operations across 26 states and Union Territories with 830 banking outlets and 15,424 employees as of March 31, 2023. It had a 3.59 million customer base majorly located in rural and semi-urban areas primarily in Bihar and Uttar Pradesh.