Equitas SFB
Mainboard₹518 Cr issue
-6.06%
Listing gain over issue price
Issue size
₹518 Cr
1 lot at cut-off
₹14,850
Lot size
450shares
Open
20 Oct 2020
Close
22 Oct 2020
Allotment
27 Oct 2020
Listing
02 Nov 2020
Listing performance
Issue price
₹33
Listed at
₹31
Listing-day close
₹32.80
Latest price
₹65.78
Close on 23 Oct 2026
Listing gain
-6.06%
Return since issue
+99.33%
Scheduled dates
Tentative timetable — a past date is not confirmation the step completed
Issue details
- IPO date
- 20 Oct 2020 – 22 Oct 2020
- Listing date
- 02 Nov 2020
- Face value
- ₹10 per share
- Issue price
- ₹33 per share
- Lot size
- 450 shares
- Total issue size
- ₹518 Cr
- ISIN
- INE063P01018
- Registrar
- Kfin Technologies Ltd.
- Lead managers
- Edelweiss Financial Services Ltd.
- Registered office
- 4th Floor, Phase II, Spencer Plaza, No. 769,, Mount Road, Anna Salai, Chennai 600 002,, Tamil Nadu, India, Tamil Nadu
Reservation and application size
How the issue is split between investor categories, and what each may bid
| Investor category | Shares | % of net | % of total |
|---|---|---|---|
| Anchor investor · within QIB | 4,23,27,271 | — | — |
| Market maker | 0 | — | — |
Application size
Minimum 450 shares per lot, in multiples, at ₹33
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (min) | 1 | 450 | ₹14,850 |
| Retail (max) | 13 | 5,850 | ₹1,93,050 |
| S-HNI (min) | 14 | 6,300 | ₹2,07,900 |
| S-HNI (max) | 67 | 30,150 | ₹9,94,950 |
| B-HNI (min) | 68 | 30,600 | ₹10,09,800 |
Category limits
| Category | Bid size | Cut-off |
|---|---|---|
| Retail (RII) | Up to ₹2 lakh | Yes |
| Small HNI (sNII) | ₹2 lakh – ₹10 lakh | No |
| Big HNI (bNII) | Above ₹10 lakh | No |
| Employee | Up to ₹5 lakh | Yes |
Bidding at cut-off means accepting the final issue price without naming one. Only retail and employee applicants may do so.
Anchor investors
Institutional allocation placed a day before the issue opens, carved out of the QIB portion and locked in after listing.
Shares allocated
4,23,27,271
Anchor portion
₹140 Cr
at ₹33 per share
Valuation and performance
Valuation at offer price
₹33 per share
| Metric | Pre-issue | Post-issue |
|---|
About Equitas SFB
Equitas Small Finance Bank Limited was originally incorporated as V.A.P. Finance Private Limited on June 21, 1993 and has undergone multiple transformations. Its promoter, Equitas Holdings Limited (EHL), received RBI In-Principle Approval on October 7, 2015 and RBI Final Approval on June 30, 2016 to establish a small finance bank. The Bank commenced operations as an SFB on September 5, 2016, following the amalgamation of Equitas Micro Finance Limited and Equitas Housing Finance Limited with Equitas Finance Limited. As of Fiscal 2019, the Bank was the largest SFB in India in terms of number of banking outlets and the second largest in terms of assets under management and total deposits. The Bank generates revenue through lending products including small business loans (41.64% of gross advances as of June 30, 2020), microfinance (23.23%), and vehicle finance (24.25%), as well as deposit-taking activities. It maintains banking outlets primarily in Tamil Nadu, with 54.31% of gross advances toward Tamil Nadu customers as of June 30, 2020.
Company Analysis
from RHPEquitas Small Finance Bank Limited is a small finance bank offering banking products and services including small business loans, microfinance, vehicle finance, and deposits to underserved and unserved customer segments in India.
Equitas Small Finance Bank Limited was originally incorporated as V.A.P. Finance Private Limited on June 21, 1993 and has undergone multiple transformations. Its promoter, Equitas Holdings Limited (EHL), received RBI In-Principle Approval on October 7, 2015 and RBI Final Approval on June 30, 2016 to establish a small finance bank. The Bank commenced operations as an SFB on September 5, 2016, following the amalgamation of Equitas Micro Finance Limited and Equitas Housing Finance Limited with Equitas Finance Limited. As of Fiscal 2019, the Bank was the largest SFB in India in terms of number of banking outlets and the second largest in terms of assets under management and total deposits. The Bank generates revenue through lending products including small business loans (41.64% of gross advances as of June 30, 2020), microfinance (23.23%), and vehicle finance (24.25%), as well as deposit-taking activities. It maintains banking outlets primarily in Tamil Nadu, with 54.31% of gross advances toward Tamil Nadu customers as of June 30, 2020.
small finance bankingmicrofinancevehicle financesmall business lendinghousing financedeposit banking
Objects of the Issue
- For augmentation of Bank's Tier I capital base p.14
- Augment the Bank's tier I capital base to meet future capital requirements such as organic growth and expansion and to comply with regulatory requirements for enhanced capital base ₹2,800 million (Fresh Issue) p.51
- Augmenting the Bank's Tier I capital base to meet the Bank's future capital requirements such as organic growth and expansion and to comply with regulatory requirements for enhanced capital base p.86
Issue Structure
- Fresh Issue
- ₹2,800 million
- Offer for Sale
- up to 72,000,000 Equity Shares aggregating up to ₹[●] million by Equitas Holdings Limited
- Face Value
- ₹10 each
Business Model
The Bank earns revenue primarily through net interest income from its lending operations across small business loans, microfinance, and vehicle finance segments. It generates interest income from advances and investments, and incurs interest expense on deposits and borrowings. The Bank also generates non-interest income from processing fees, documentation charges, and other banking services. Its funding comes from retail deposits (44.42% of term deposits as of March 31, 2020), wholesale deposits, and refinancing arrangements. The Bank targets the financially unserved and underserved customer segments in India.
Business Segments
Provides small business loans including housing loans and loans against property to customers in the small and micro enterprise segment
Provides microfinance loans to individuals and families for micro-entrepreneurial enterprises and income-generating activities, typically using peer-guarantee loan model with joint liability groups
Provides vehicle financing for commercial vehicles, utility vehicles, tractors and other vehicles
Used and new commercial vehicle financing across various states in India
Lending to microfinance customers and small entrepreneurs
Providing loans against property as collateral
Distribution of third-party insurance, mutual fund products, issuance of FASTags
Provision of small business loans comprising loans against property (LAP), housing loans, and agriculture loans to micro-entrepreneurs and other small business borrowers in unserved and underserved segments
Microfinance loans provided to joint liability groups (JLGs) predominantly comprising women in unserved and underserved segments
Financing of used and new commercial vehicles for drivers and micro-entrepreneurs typically engaged in logistics
Working capital loans and other credit facilities provided to micro and small enterprises
Corporate loans provided to corporate borrowers
Provides asset-backed financing to self-employed individuals operating small enterprises for working capital or capital investment. Includes Micro-LAP, Salaried-LAP, Agriculture-LAP, and General-LAP products with ticket sizes ranging from ₹50,000 to ₹2 million, typically secured by property.
Provides group loans to micro-entrepreneurial women with limited access to formal financing, built on a peer-guarantee loan model. Ticket sizes range from ₹5,000 to ₹35,000 with average ticket size of ₹14,500 for income-generating activities with tenure up to two years.
Finances purchase of used and new commercial vehicles for first-time formal financial channel borrowers and small fleet operators with significant experience in logistics. Ticket sizes for used vehicles range from ₹200,000 to ₹500,000 and for new vehicles from ₹300,000 to ₹700,000.
Provides working capital loans in the form of fund-based facilities (cash credit limits, overdraft limits) and non-fund-based facilities (bank guarantees, letters of credit) to enterprises maintaining formal records. Ticket sizes range from ₹1 million to ₹50 million with average of ₹3.28 million.
Extends term loans to NBFCs that further lend to retail customers in microfinance, vehicle finance, housing finance and similar sectors, and to certain corporates. Average ticket size ranges from ₹150 million to ₹500 million, typically to entities rated BBB from recognized credit rating agencies.
Provides loans to small business borrowers and housing finance
Provides micro finance loans to small borrowers
Provides financing for purchase of used and new commercial vehicles
Provides loans to agriculture sector
Provides working capital financing to small and micro enterprises
Provides financing to corporate customers
Includes all investment portfolios, profit/loss on sale of investments, PSLC fee, profit/loss on foreign exchange transaction, equities, income from derivatives and money market operations. The expenses of this segment consist of interest expenses on funds borrowed from external sources as well as internal sources and depreciation/amortisation of premium on HTM category investments.
Includes lending to and deposits from retail customers and identified earnings and expenses of the segment.
Includes all advances to trusts, partnership firms, companies and statutory bodies, which are not included under Retail Banking.
Provision of small business loans comprising LAPs and housing loans to micro-entrepreneurs
Microfinance to JLGs predominantly comprising women
Used and new commercial vehicle loans to drivers and micro-entrepreneurs typically engaged in logistics
MSE loans to proprietorships
Corporate loans
SWOT Analysis
Strengths
- • Largest SFB by banking outlets; second largest by assets and deposits(p.14)
- • Successfully diversified loan portfolio away from microfinance dependence(p.14)
- • Focused strategy on serving financially unserved and underserved segments(p.14)
- • Established provision coverage for NPAs(p.38)
- • Wide banking outlet network(p.42)
- • Growing deposit base and CASA deposits(p.45)
- • Trademark registrations and brand recognition(p.41)
- • Large scale SFB with diversified asset portfolio and efficient growth trajectory(p.121)
- • Successfully diversified away from microfinance with lower yields than peer MFI converters(p.121)
- • Strong retail deposit base with second-highest CASA ratio among SFBs(p.121)
- • High credit ratings enabling competitive capital access(p.122)
- • Deep customer understanding through 13+ years of microfinance experience(p.123)
- • Technologically advanced operations with high digital transaction penetration(p.126)
- • Experienced management team with proven track record in financial services(p.126)
- • Strong deposit growth with second-fastest growth rate among SFBs(p.121)
- • Diversified product portfolio across microfinance, housing, vehicle and small business lending(p.132)
- • Strong digital capabilities enabling operational efficiency and customer reach(p.144)
- • Established presence across 17 states with 856 banking outlets and 252 business correspondents(p.139)
- • Large and growing customer base with 293,657 savings account holders and diversified liability products(p.137)
- • Strong capital adequacy ratios well above regulatory minimums(p.141)
- • Specialized underwriting expertise in unsecured and informal sector lending(p.134)
- • Strong collection infrastructure with low-cost operations and multi-channel approach(p.134)
- • Experienced management team with significant banking and finance industry background(p.183)
- • Substantial capital base with strong capital adequacy ratio exceeding regulatory requirements(p.209)
- • Diversified revenue streams across multiple loan products and customer segments(p.204)
- • Growing customer base and deposit mobilization(p.220)
- • Strong capital adequacy with robust CRAR above regulatory minimums(p.262)
- • Diversified loan portfolio with significant priority sector lending focus(p.243)
- • Growing advances portfolio with year-on-year expansion(p.243)
- • Solid investment holdings in government securities and approved instruments(p.243)
- • Largest SFB network in India by number of banking outlets(p.307)
- • Successfully diversified loan portfolio with reduced microfinance dependence(p.307)
- • Strong credit ratings supporting competitive funding access(p.308)
- • Low-cost deposit funding base with stable retail deposits(p.308)
- • Effective risk management and low NPA levels(p.308)
- • High productivity levels per employee and outlet(p.308)
- • Significant market share with 16% AUM in Fiscal 2019(p.307)
Weaknesses
- • High dependence on large depositors; concentration risk(p.35)
- • Geographic concentration of advances in Tamil Nadu(p.35)
- • Significant unsecured loan portfolio without collateral protection(p.36)
- • High exposure to loans against property with market risk(p.36)
- • Limited CASA ratio and high dependence on retail deposits(p.33)
- • Significant RBI compliance deficiencies and observations(p.38)
- • High volume of fraud incidents and cash handling risks(p.39)
- • Cyber security compliance gaps and IT system vulnerabilities(p.40)
- • Missing historical corporate documents and regulatory filings(p.40)
- • Dependence on brand and uncertain trademark usage rights(p.41)
- • Concentration on leased premises with renewal risks(p.42)
- • Negative cash flows from operations(p.43)
- • Significant contingent liabilities not provided for(p.48)
- • Limited experience with new products and services(p.39)
- • Employee attrition and key personnel retention challenges(p.47)
- • Asset-liability mismatches and liquidity risks(p.42)
- • Restriction on branch expansion(p.42)
- • High operational expenses as percentage of assets constraining profitability(p.101)
- • Declining CASA ratio signaling rising cost of funds(p.127)
- • Asset quality concerns with GNPA ratio above industry average(p.122)
- • Lower efficiency metrics compared to peers on per-employee basis(p.127)
- • Significant exposure to used commercial vehicle segment with higher NPA rates(p.126)
- • Lower profitability metrics relative to peers(p.104)
- • Concentration risk in microfinance and small business lending which combined represent 65.84% of advances(p.132)
- • Elevated NPAs in vehicle finance segment at 3.78% of portfolio(p.134)
- • Elevated NPAs in small business loans segment at 2.65% of portfolio(p.132)
- • Heavy reliance on retail deposits for funding creates liquidity risk(p.136)
- • All branch premises are on leasehold basis creating operational dependency(p.146)
- • Customer base concentrated in low-income segments with limited formal documentation(p.132)
- • Rising Non-Performing Asset ratio indicating credit quality deterioration(p.216)
- • Dependence on few large corporate borrowers creating concentration risk(p.206)
- • Declining CASA ratio reducing low-cost funding source(p.198)
- • High credit-to-deposit ratio above 1.8x indicating heavy reliance on wholesale funding(p.226)
- • Elevated NPA levels relative to advances portfolio(p.267)
- • High concentration of deposits among top depositors(p.292)
- • Regulatory restrictions on branch expansion and MD remuneration due to listing delay(p.251)
- • Significant COVID-19 impact on operations and asset quality requiring substantial provisioning(p.252)
- • Declining CASA ratio indicating shift from low-cost deposits(p.308)
- • High employee base creating operational challenges(p.308)
- • Exposure to COVID-19 impact on collections and provisions(p.309)
- • Accumulated general provisions made for COVID-19 uncertainties(p.310)
- • Rising provision coverage ratio reflecting asset quality stress(p.325)
- • Dependence on specific deposit and borrowing sources(p.312)
- • Regulatory penalties and enforcement actions from RBI(p.347)
- • Non-compliance with SFB Licensing Guidelines listing timeline(p.348)
- • Restriction on branch expansion due to regulatory sanctions(p.348)
- • High level of fraud instances and theft losses(p.346)
- • Significant litigation from loan recovery (Section 138 of Negotiable Instruments Act)(p.346)
- • Substantial financial indebtedness and refinance dependency(p.341)
- • Restrictive covenants limiting operational flexibility(p.342)
Opportunities
- • Expansion of banking outlets in unbanked rural areas(p.27)
- • Growth in small business loans and vehicle finance segments(p.31)
- • Strategic expansion of banking outlets network(p.42)
- • Growth of CASA deposits and customer base(p.45)
- • Expansion of non-interest income and fee-based services(p.46)
- • Use of net proceeds for capital augmentation and organic growth(p.52)
- • Underserved segments in economically weaker sections(p.45)
- • Significant market opportunity in underserved microfinance segment with 25% expected CAGR(p.107)
- • Strong growth in SFB sector with 25% expected CAGR in loan portfolios(p.100)
- • Expansion opportunity in affordable housing with 9-10% CAGR expected through Fiscal 2022(p.111)
- • Vehicle finance market growth through BS-VI transition creating demand(p.115)
- • MSME credit market expansion with low penetration and 10% CAGR growth potential(p.118)
- • Cross-selling opportunities within existing customer base for deposit products(p.127)
- • Technology-enabled product innovation to drive non-interest income growth(p.129)
- • Market share gains opportunity from NBFCs facing liquidity constraints(p.100)
- • Expansion of MSE lending into formal sector with higher ticket sizes and better credit quality(p.135)
- • Growth in new commercial vehicle financing business with stronger margins(p.134)
- • Expansion of affordable housing finance products to cross-sell to existing asset customers(p.133)
- • Branch expansion mandated at 25% in unbanked rural centres supporting financial inclusion(p.150)
- • Growing digital wealth management and mutual fund distribution through technology platforms(p.138)
- • Expansion through business correspondent network to reach underserved locations at low cost(p.150)
- • Group lending model advantages in high-growth microfinance segment(p.133)
- • Technology-driven innovation in blockchain and workflow management patents filed(p.144)
- • Expanding retail deposit base, particularly in term deposits from retail customers(p.199)
- • Growing presence across India with expanding branch network in underserved markets(p.209)
- • Strong growth in micro finance and small business lending segments with expanding market opportunities(p.205)
- • Significant growth in vehicle finance and commercial vehicle lending(p.205)
- • Expansion into underserved retail banking segments including microfinance and commercial vehicle finance(p.251)
- • Growth in priority sector advances to underserved micro and small enterprises(p.251)
- • Completion of IPO to lift regulatory restrictions and enable branch expansion(p.251)
- • Development of comprehensive digital banking platform for wider customer reach(p.251)
- • Expansion of secured advances portfolio targeting housing and vehicle finance(p.311)
- • Technology-enabled growth and digital banking expansion(p.309)
- • Cross-selling opportunities with existing group customers(p.311)
- • Rapid deposit growth with second fastest growth among SFBs(p.308)
- • Expansion into emerging product categories(p.307)
- • On-tap SFB licensing creating market consolidation opportunity(p.313)
Threats
- • COVID-19 pandemic causing collection decline and NPA increase(p.25)
- • Interest rate volatility affecting net interest margins(p.30)
- • Regulatory compliance burden and potential RBI penalties(p.29)
- • Promoter shareholding reduction requirement by RBI(p.34)
- • Regional economic slowdown in Tamil Nadu affecting borrower repayment(p.35)
- • Collateral value depreciation in vehicle finance portfolio(p.36)
- • Joint liability group model failure in microfinance(p.36)
- • Government loan waiver programs affecting repayment culture(p.36)
- • Increased NPA levels from business segment downturns(p.31)
- • RBI may impose penalties or restrict banking activities(p.38)
- • Intense competition from organized and informal lenders(p.45)
- • Economic slowdown and macroeconomic headwinds(p.54)
- • COVID-19 pandemic impacts on operations and asset quality(p.54)
- • Regulatory changes and policy uncertainties(p.55)
- • Credit quality deterioration and higher NPAs(p.46)
- • Customer concentration and default risks in microfinance segment(p.46)
- • Foreign currency borrowing constraints and exchange rate volatility(p.56)
- • Restrictive covenants in financing agreements(p.44)
- • Inflation and rising operating costs(p.56)
- • Adverse changes in India's sovereign rating(p.57)
- • Significant COVID-19 pandemic impact on collections and asset quality(p.130)
- • Regulatory dilution requirement on promoter shareholding over time(p.98)
- • Increasing competition from well-capitalized banks and other SFBs for deposits(p.100)
- • Regulatory restriction on minimum loan ticket size limiting business flexibility(p.98)
- • High cost of accepting deposits in rural regions increasing funding pressure(p.100)
- • Asset quality deterioration risk in vehicle finance segment with external regulatory pressures(p.114)
- • Risk of declining microfinance portfolio amid regulatory and competitive pressures(p.109)
- • Monetary policy tightening and interest rate volatility affecting cost of funds and spreads(p.108)
- • Significant competition from unorganized players, other SFBs, NBFCs and scheduled commercial banks(p.145)
- • Exposure to interest rate volatility affecting net interest margins and profitability(p.141)
- • Liquidity risk from deposit market volatility and potential maturity mismatches(p.141)
- • Regulatory tightening and compliance burden from evolving RBI and SEBI requirements(p.150)
- • Microfinance customer base concentration in low-income groups vulnerable to economic shocks(p.133)
- • Mandatory listing requirement creates capital dilution pressure and governance complexity(p.149)
- • Operational risks from handling large volumes of cash including fraud and embezzlement(p.142)
- • Cyber security and information security risks from increasing digital operations(p.142)
- • Regulatory constraints on dividend distribution limiting capital deployment flexibility(p.192)
- • COVID-19 pandemic impact on borrower credit quality and economic environment(p.233)
- • Intense competition from larger established banks and microfinance institutions(p.215)
- • Interest rate sensitivity and pressure on net interest margins from declining interest rates(p.197)
- • Asset quality deterioration due to COVID-19 pandemic economic disruption(p.252)
- • Increasing non-performing advances reflecting credit stress in customer base(p.267)
- • Interest rate volatility and deposit cost pressure in competitive banking environment(p.245)
- • Intense competition from larger established banks and fintech disruptors in retail lending(p.251)
- • Regulatory restrictions on SFB operations limiting business flexibility(p.311)
- • Increased competition from new SFB licensees and existing players(p.313)
- • Interest rate volatility impacting net interest margins(p.312)
- • Asset quality deterioration from economic slowdown and COVID-19(p.309)
- • Macro-economic headwinds affecting customer repayment ability(p.325)
- • Regulatory changes and uncertainty in policy implementation(p.310)
- • Risk of restrictive covenant breaches affecting financial flexibility(p.331)
- • Regulatory pressure and potential further enforcement actions(p.348)
Promoters
| Name | Role | Pre-Issue | Post-Issue |
|---|---|---|---|
| Equitas Holdings Limited | Promoter/Promoter Selling Shareholder | 95.49% | — |
| Equitas Holdings Limited (EHL) | Promoter | 95.49% | [●]% |
| EHL | Promoter | 95.49% | — |
| Equitas Holdings Limited (EHL) | Promoter | — | — |
| Equitas Holdings Limited (EHL) | Promoter | 95.49% | — |
| Equitas Holdings Limited | Holding Company | — | — |
| Equitas Holdings Limited | Promoter Selling Shareholder | — | — |
Leadership
Vasudevan Pathangi Narasimhan · Managing Director and Chief Executive Officer
Sridharan Nanuiyer · Chief Financial Officer
Sampathkumar K. Raghunathan · Company Secretary and Compliance Officer
Auto-extracted from the company's RHP using AI, with each fact linked to its source passage (hover any row to see the quote & page). Provided for research only, not investment advice — verify against the official RHP before relying on it.
Equitas SFB IPO FAQs
What is the lot size of Equitas SFB IPO?
The minimum lot size of Equitas SFB IPO is 450 shares. One lot costs ₹14,850 at the cut-off price.
When does Equitas SFB IPO open and close?
Equitas SFB IPO opened for subscription on 20 Oct 2020 and closed on 22 Oct 2020.
What is the listing date of Equitas SFB IPO?
Equitas SFB IPO listed on 02 Nov 2020.