ESAF Small Finance Bank made a strong debut on D-street, listing at a 20% premium compared to its issue price of ₹60. This was slightly lower than the 33% listing gains that the grey market had predicted. The stock closed at ₹69.05 per share, slightly below its listing price, ending at a premium of 15.08% over the IPO price.
The ₹463 crore issue was subscribed 73 times the shares on offer, with significant interest from institutional investors. Notable anchor investors included BNP Paribas Arbitrage, Kotak Mahindra Life Insurance, Edelweiss Tokio Life Insurance, and ICICI Prudential Life Insurance, among others.
Prashanth Tapse, senior VP of research at Mehta Equities, had predicted listing gains of 20-30% and justified the premium listing based on investor-friendly pricing and reasonable IPO valuations compared to peers.
The IPO was a combination of a fresh issue and offer for sale, and the bank intends to use the net proceeds from the fresh issue to augment its Tier – I capital base and meet future capital requirements.
Despite its nationwide presence, ESAF SFB’s primary business operations are concentrated in South India, particularly in the states of Kerala and Tamil Nadu. Its gross NPA and net NPA stood at 2.49% and 1.13% respectively in Q1FY24.
The bank’s growth and profitability, as well as its limited presence in North India, pose potential risks to its future operations. Overall, the listing performance of recent D-street debuts has been mixed, with some companies experiencing muted gains while others, like Cello World, have shown strong gains.