Suryoday Small Finance Bank Ltd. IPO

IPO Details:

Price Band: 303-305

Cutoff Price: 305

About Company:

Suryoday SFB have for over a decade been serving customers in the unbanked and underbanked segments in India and promoting financial inclusion. Pursuant to receipt of the RBI Final Approval, it started operations as an SFB on January 23, 2017. It was included in the second schedule to the RBI Act, as a scheduled bank pursuant to a notification dated July 24, 2017, issued by the RBI and published in the gazette of India dated September 2, 2017. Prior to commencement of operations as an SFB, it operated as an NBFC–MFI carrying out microfinance operations and operated the joint liability group-lending model for providing collateral-free, small ticket-size loans to economically active women belonging to weaker sections. Average “priority sector” loans, as a percentage of average ANBC for Fiscal 2018, 2019 and 2020 and nine months ended December 31, 2020 was 99.08%, 112.10%, 103.67% and 114.09%, respectively. Over the years, Suryoday SFB had diversified their loan portfolio to include non-micro banking loans thereby reducing our dependence on micro banking business.

Competitive Strengths:

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

Strategies:

1. Expand our asset portfolio while focusing on secured lending

2. Strengthen our retail liability franchise

3. Continue to focus on technology and data analytics to grow operations

4. Expand geographic presence and penetrate further into existing geographies

Financial Performance:

Net Profit and Revenue were increasing YoY. Because of pandemic, current FY21 revenues, net profit and EPS got affected.

Objects of the Issue:

Fresh Issue towards augmenting our Bank’s Tier–1 capital base to meet our Bank’s future

capital requirements.

Competitors Comparison:

Our view: Suryoday SFB looks undervalued after comparing with its competitors. I am avoiding this IPO.

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