ESAF Small Finance Bank
Book Building issueMainboard₹463 Cr issue
+19.83%
Listing gain over issue price
Issue size
₹463 Cr
1 lot at cut-off
₹15,000
Lot size
250shares
Open
03 Nov 2023
Close
07 Nov 2023
Allotment
08 Nov 2023
Listing
10 Nov 2023
Listing performance
Issue price
₹60
Listed at
₹71.90
Listing-day close
₹69.05
Latest price
₹38.82
Close on 23 Oct 2026
Listing gain
+19.83%
Return since issue
-35.30%
Scheduled dates
Tentative timetable — a past date is not confirmation the step completed
Issue details
- IPO date
- 03 Nov 2023 – 07 Nov 2023
- Listing date
- 10 Nov 2023
- Face value
- ₹10 per share
- Issue price
- ₹60 per share
- Lot size
- 250 shares
- Issue type
- Book Building issue
- Total issue size
- ₹463 Cr
- Market cap at offer price
- ₹3,088 Cr
- Promoter holding
- 74.43% → 63.40% pre-issue → post-issue
- ISIN
- INE818W01011
- Registrar
- MUFG Intime India Pvt.Ltd.
- Lead managers
- ICICI Securities Ltd.
- Registered office
- Building No.VII/83/8, ESAF Bhavan, Thrissur-Palakkad National Highway, Mannuthy, Kerala
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 | 2,25,24,998 | — | — |
| Market maker | 0 | — | — |
Application size
Minimum 250 shares per lot, in multiples, at ₹60
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (min) | 1 | 250 | ₹15,000 |
| Retail (max) | 13 | 3,250 | ₹1,95,000 |
| S-HNI (min) | 14 | 3,500 | ₹2,10,000 |
| S-HNI (max) | 66 | 16,500 | ₹9,90,000 |
| B-HNI (min) | 67 | 16,750 | ₹10,05,000 |
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
2,25,24,998
Anchor portion
₹135 Cr
at ₹60 per share
Valuation and performance
Valuation at offer price
₹60 per share
| Metric | Pre-issue | Post-issue |
|---|---|---|
| EPS (₹) | 6.73 | — |
| P/E (×) | 8.92 | — |
| Market cap | — | ₹3,088 Cr |
Key performance indicators
Latest reported period
- Return on net worth
- 17.69%
- NAV per share
- ₹38.03
Single period as reported. Year-on-year movement is in the financials table below, where every period is published.
About ESAF Small Finance Bank
ESAF Small Finance Bank Limited ("our Bank" or "the Bank") was incorporated on May 5, 2016 as a public limited company under the Companies Act, 2013 and received final approval from the RBI on November 18, 2016 to carry on small finance bank business. The Bank commenced operations on March 10, 2017 and was included in the second schedule to the RBI Act on November 12, 2018. The Bank operates a small finance bank business focused on unbanked and underbanked customer segments, especially in rural and semi-urban centres. Its primary products are advances (micro loans comprising microfinance loans and other micro loans, retail loans including gold loans and mortgages, MSME loans, agricultural loans, and loans to financial institutions) and deposits (current accounts, savings accounts, term deposits, and recurring deposits). As of June 30, 2023, 74.70% of the Bank's advances under management were micro loans. The Bank operates through 700 banking outlets as of June 30, 2023, with significant concentration in South India, particularly Kerala and Tamil Nadu.
Company Analysis
from RHPESAF Small Finance Bank Limited is a small finance bank headquartered in Kerala that provides microfinance loans, retail loans, and deposits to unbanked and underbanked customers primarily in rural and semi-urban centres across South India.
ESAF Small Finance Bank Limited ("our Bank" or "the Bank") was incorporated on May 5, 2016 as a public limited company under the Companies Act, 2013 and received final approval from the RBI on November 18, 2016 to carry on small finance bank business. The Bank commenced operations on March 10, 2017 and was included in the second schedule to the RBI Act on November 12, 2018. The Bank operates a small finance bank business focused on unbanked and underbanked customer segments, especially in rural and semi-urban centres. Its primary products are advances (micro loans comprising microfinance loans and other micro loans, retail loans including gold loans and mortgages, MSME loans, agricultural loans, and loans to financial institutions) and deposits (current accounts, savings accounts, term deposits, and recurring deposits). As of June 30, 2023, 74.70% of the Bank's advances under management were micro loans. The Bank operates through 700 banking outlets as of June 30, 2023, with significant concentration in South India, particularly Kerala and Tamil Nadu.
BankingSmall Finance BankingMicrofinanceRetail BankingMSME lending
Objects of the Issue
- For augmentation of our Bank's Tier – 1 capital base [●] (to be finalised upon determination of the Offer Price) p.27
- Augmenting the Bank's Tier – I capital base to meet the Bank's future capital requirements p.48
- Increasing business of the Bank which is primarily onward lending p.48
- Meeting expenses in relation to the Offer p.48
- Augmentation of Bank's Tier-I capital base to meet future capital requirements arising from growth in assets primarily advances and investment portfolio ₹3,907.00 million (Fresh Issue) p.131
- Fresh Issue by the Bank ₹3,907.00 million p.472
- Offer for Sale by Selling Shareholders ₹723.00 million p.472
- Employee Reservation Portion ₹125.00 million p.472
Issue Structure
- Total Issue
- Up to [●] equity shares of face value of ₹10 each aggregating up to ₹4,630.00 million
- Fresh Issue
- Fresh Issue of up to [●] equity shares of face value of ₹10 each aggregating up to ₹3,907.00 million
- Offer for Sale
- Offer for Sale up to [●] equity shares of face value of ₹10 each aggregating up to ₹723.00 million (comprising up to [●] equity shares aggregating up to ₹492.60 million by the Promoter Selling Shareholder, up to [●] equity shares aggregating up to ₹126.70 million by PNB MetLife India Insurance Company Limited and up to [●] equity shares aggregating up to ₹103.70 million by Bajaj Allianz Life Insurance Company Limited)
- Price Band
- [●] per Equity Share (Floor Price) to [●] per Equity Share (Cap Price), with face value of ₹10 each
- Lot Size
- [●] Equity Shares and in multiples of [●] Equity Shares thereafter
- Face Value
- ₹10 each
Business Model
The Bank generates revenue primarily through interest income on advances (81% of revenue in Fiscal 2023), interest income on investments and other sources (10%), commission income (6%), and other income (3%). The Bank accepts deposits from customers and deploys these funds as advances (loans) to customers across various segments. The Bank earns net interest income (the difference between interest earned on advances and investments and interest expended on deposits and borrowings) and additional revenue through commission and other services.
Business Segments
Comprises Microfinance Loans (loans to individuals with annual household income up to ₹0.30 million in sub-groups) and Other Micro Loans (loans to individuals with household income above ₹0.30 million in sub-groups)
Includes gold loans, mortgages, personal loans, and vehicle loans
Current accounts, savings accounts, term deposits and recurring deposits
Loans to micro, small and medium enterprises, loans to financial institutions and agricultural loans
Loans made to the poorer sections of society (annual household income of up to ₹0.30 million), primarily sourced and serviced through business correspondents in rural and underbanked areas.
Includes gold loans (commenced Fiscal 2019), agricultural loans (commenced Fiscal 2021), MSME loans (commenced Fiscal 2020), and other retail lending products.
Investment portfolio and treasury operations generating investment income and gains/losses on investments.
Distribution of life insurance, general insurance, Atal Pension Yojana, National Pension System, and other financial products.
Small unsecured loans primarily to low-income households, typically through joint liability groups
Secured loans provided against gold pledged as collateral
Credit provided to support agricultural activities
Credit provided to micro, small and medium enterprises
Microfinance Loans and Other Micro Loans provided to individuals without collateral, comprising Microfinance Loans (annual household income up to ₹0.30 million) and Other Micro Loans (household income above ₹0.30 million). Loans are provided to individuals who are part of sub-groups (2-10 people) which form sangams.
Includes gold loans, mortgages, personal loans, vehicle loans, education loans, and other retail products. Offered to salaried individuals, self-employed persons, businesses, and customers graduating from microfinance loans.
Loans to Micro, Small and Medium Enterprises for working capital, term loans, and supply chain financing. Products include term loans for existing sangam members to grow businesses, loans to residents with businesses/shops for working capital, and TReDS platform discounting.
Loans for agricultural activities including farm credit, agricultural infrastructure, dairy development, kisan credit cards, farmer producer organization finance, and SHG-BLP for self-help groups. Offered to individual farmers, joint borrowers, and farmer producer organizations.
Loans to NBFCs and MFIs for onward lending, provided after due diligence on business model, management experience, external ratings, and loan portfolio quality.
Liability products including current accounts, savings accounts, fixed deposits (7 days to 10 years tenure), and recurring deposits (6 months to 10 years tenure). Also offers NRE and NRO accounts for NRI customers.
Loans provided to individuals who are members of sub-groups, including microfinance loans and other micro loans
Loans provided to non-corporate customers
Loans provided to micro, small and medium enterprises
Loans provided for agricultural and allied activities
Loans provided to financial institutions
Treasury operations including investment and liquidity management
Lending and banking services to wholesale clients
Retail lending, deposits and banking services to individuals and small businesses
Treasury segment primarily consists of interest earnings on investment portfolio, gains or losses on investment operations and earnings from foreign exchange business. Includes allocation of deposits received from customers.
Provides loans to corporate segment identified on basis of RBI guidelines. Revenues consist of interest earned on loans to corporate customers and charges/fees from other banking services.
Provides loans to non-corporate customers (including microfinance loans, retail loans, MSME loans, agricultural loans) and accepts deposits. Revenues consist of interest earned on loans and charges/fees from banking services.
Includes income from para banking activities such as debit cards and third-party product distribution (insurance, pension schemes).
SWOT Analysis
Strengths
- • Established SFB with regulatory approval and banking license(p.3)
- • Focus on underserved segments with growth trajectory(p.26)
- • Strong growth in AUM(p.26)
- • Diversified revenue streams(p.26)
- • Improving asset quality(p.29)
- • Strong capital adequacy with flexibility to support growth(p.131)
- • Significant business scale and consistent growth trajectory(p.93)
- • Improved asset quality with lower NPA levels(p.137)
- • Highest AUM growth rate among peer SFBs(p.174)
- • Highest AUM per employee and business per employee(p.176)
- • Highest yield on advances among SFBs(p.176)
- • Best asset quality among peer SFBs(p.177)
- • Highest proportion of retail deposits(p.175)
- • Strong presence in high-growth rural segment(p.176)
- • Extensive microfinance expertise enabling geographic expansion beyond home state(p.198)
- • Strong rural and semi-urban banking franchise with substantial customer base(p.198)
- • Significant retail deposit growth with expanding NRI deposit base(p.199)
- • Technology-driven operations with digital advancement including e-signatures and core banking solutions(p.200)
- • Customer-centric products and processes with strong retention and industry recognition(p.199)
- • Experienced management with deep banking and microfinance expertise(p.200)
- • Established regulatory framework and licensing from RBI as scheduled SFB(p.246)
- • Extensive track record and business succession from parent NBFC-MFI with customer base(p.279)
- • Authorized Dealer Category-I foreign exchange license enabling forex business(p.248)
- • Membership in Global Alliance for Banking on Values demonstrating values-based operations(p.248)
- • Substantial scale with 700 branches and 6 million customers by 2023(p.248)
- • Diversified leadership board with experienced professionals(p.280)
- • Strong deposit growth across geographies(p.315)
- • Robust AUM growth and disbursement capacity(p.295)
- • Improving profitability and return metrics(p.289)
- • Strong regulatory capital adequacy well above minimum requirements(p.333)
- • Healthy liquidity coverage ratios exceeding regulatory minimums(p.337)
- • Robust net stable funding ratios well above 100% regulatory requirement(p.339)
- • Significant priority sector lending focus(p.357)
- • Improved asset quality with declining NPA ratios(p.357)
- • Strong provision coverage for asset impairment(p.357)
- • Highest AUM growth among comparable SFBs over Fiscal 2021-2023(p.377)
- • Significant expansion of distribution network and banking outlets(p.377)
- • Strong deposit growth trajectory(p.377)
- • Strong recovery of NPAs and improved asset quality(p.384)
- • Diversified product portfolio with growing retail advances(p.389)
Weaknesses
- • High concentration in micro loans(p.29)
- • High proportion of unsecured advances(p.29)
- • RBI compliance non-compliance(p.29)
- • RBI inspection observations and ongoing compliance issues(p.29)
- • Regulatory scrutiny of holding structure(p.29)
- • Directions issued to Managing Director(p.29)
- • No proceeds from offer for sale to bank(p.30)
- • Reliance on two key selling shareholders with regulatory sanctions(p.48)
- • High cost of reaching rural microfinance customers and extended breakeven periods(p.48)
- • High employee attrition rates requiring increased compensation(p.49)
- • Extreme dependence on ESMACO as key business correspondent(p.50)
- • Significant portfolio concentration in agricultural sector(p.54)
- • Material non-compliance with KYC/AML requirements(p.85)
- • Unregistered lease/license agreements create legal risk(p.85)
- • Negative cash flows from operating activities in recent fiscals(p.86)
- • High cost-to-income ratio affecting profitability(p.59)
- • Never paid dividends; uncertain future dividend capacity(p.94)
- • High management discretion over use of capital; fund deployment not independently appraised(p.95)
- • Dependence on regulatory capital requirements to drive fund utilization(p.131)
- • High concentration in microfinance product portfolio(p.177)
- • Geographic concentration risk in high-weighted states(p.176)
- • Smaller scale relative to AU SFB peer(p.174)
- • High geographic concentration in South India, particularly Kerala and Tamil Nadu(p.195)
- • High employee attrition rate impacting operational stability(p.223)
- • Heavy dependence on business correspondent model for microfinance sourcing(p.214)
- • Significant reliance on single largest business correspondent (ESMACO) for loan sourcing(p.215)
- • Heavy dependence on Managing Director and Chief Executive Officer with limited management depth(p.263)
- • Prior regulatory non-compliance by Managing Director requiring RBI re-approval(p.263)
- • Concentration of shareholding with Promoters holding 69.40% of shares subject to dilution obligations(p.279)
- • Ongoing litigation against Managing Director creating governance risk(p.263)
- • Dependence on trademark license from ESAF Foundation with termination triggers(p.254)
- • Concentrated depositor base creating funding risk(p.293)
- • Significant NPA decline but elevated historical levels(p.300)
- • High operating expense to asset ratio(p.289)
- • Geographic concentration in southern India(p.292)
- • Rising fraudulent activity in customer accounts(p.360)
- • Concentration risk in deposit base(p.362)
- • High employee costs relative to operating expenses(p.332)
- • Significant unresolved COVID-19 contingency provisions maintained(p.366)
- • Heavy dependence on single business correspondent ESMACO(p.378)
- • High concentration of advances sourced through business correspondents(p.378)
- • Significant reliance on business correspondent income(p.378)
- • Substantial business correspondent expenses consuming significant income(p.379)
- • High proportion of unsecured advances in portfolio(p.385)
- • Pending labour and compliance litigation across multiple states(p.427)
- • Significant criminal litigation relating to employee fraud and misappropriation(p.428)
- • Widespread spurious gold pledging fraud by borrowers and employees(p.431)
- • Exposure to borrower default and NPA-related SARFAESI proceedings(p.434)
- • Large volume of cheque bounce litigation (729 cases pending)(p.434)
- • RBI-imposed management transition due to shareholding divestment(p.436)
- • Substantial direct tax demand under assessment proceedings(p.438)
Opportunities
- • Industry-wide growth in microfinance lending(p.26)
- • Expansion into underserved geographies(p.43)
- • Retail lending expansion beyond micro loans(p.26)
- • Growth in underpenetrated microfinance markets(p.59)
- • Expansion in priority sector lending across multiple segments(p.52)
- • Rapid growth in branch and banking outlet network(p.75)
- • Expansion of lending portfolio and advances growth(p.131)
- • Enhanced market presence through listing on stock exchanges(p.131)
- • Growth in retail deposits portfolio(p.135)
- • Expansion beyond home state leveraging micro-loan expertise(p.135)
- • Significant rural credit penetration gap(p.162)
- • Strong SFB sector growth trajectory(p.168)
- • Rising microfinance industry growth(p.180)
- • Deposit mobilization opportunity(p.171)
- • Gold loan market expansion(p.190)
- • Portfolio diversification into non-MFI products(p.169)
- • Significant growth opportunity in rural credit market with low financial inclusion penetration(p.199)
- • Strong tailwinds in microfinance sector with expected 22-24% CAGR growth(p.201)
- • Expansion in affordable housing finance with 11-12% CAGR expected(p.193)
- • GST improving MSME creditworthiness and opening previously untapped credit demand(p.193)
- • Credit Guarantee Fund Scheme extension to NBFCs reducing collateral requirements for MSMEs(p.193)
- • Strategic opportunity to penetrate deeper in existing geographies through expanded distribution(p.201)
- • Authorization to conduct government agency business as scheduled SFB(p.236)
- • Expansion of foreign exchange business and cross-border transactions via AD-I license(p.236)
- • Green deposit mobilization aligned with sustainability framework(p.242)
- • Microfinance regulatory framework supporting targeted lending to underserved households(p.241)
- • Securitization of standard assets enabling liability management and asset distribution(p.237)
- • Priority sector lending compliance requirement driving loan growth(p.299)
- • Expansion into metro and urban markets(p.292)
- • Growth in retail and MSME lending segments(p.295)
- • Microfinance loan portfolio segmentation and expansion(p.295)
- • Expansion of retail lending portfolio in priority sectors(p.357)
- • Growth in real estate exposure and housing finance(p.361)
- • Bancassurance business development(p.365)
- • Digital banking platform expansion(p.368)
- • Strategy to penetrate deeper into existing geographies(p.377)
- • Strategy to grow Micro Loans while increasing other advance categories(p.402)
- • Expanding presence across new states and union territories(p.378)
- • Growing income from new products and services(p.389)
Threats
- • Regulatory changes in microfinance lending framework(p.41)
- • Potential adverse publicity in microfinance sector(p.41)
- • Regulatory compliance penalties(p.29)
- • Geographic concentration risk(p.29)
- • Reputational risk from selling shareholders(p.30)
- • Vulnerability of low-income household income to local developments(p.48)
- • Lack of financial and product awareness in rural centres(p.49)
- • Stringent regulatory requirements and compliance obligations(p.52)
- • Limited geographic presence in top microfinance states(p.59)
- • Intense competition in microfinance sector(p.75)
- • COVID-19 and pandemic-related economic disruption(p.68)
- • Downturn in macroeconomic environment in India(p.91)
- • Interest rate volatility affecting Net Interest Margin(p.66)
- • Requirement to maintain high priority sector lending ratios(p.52)
- • Equity price volatility and lack of guaranteed market liquidity post-listing(p.93)
- • Risk of regulatory surveillance measures affecting stock liquidity and reputation(p.94)
- • RBI-mandated shareholding dilution requirements constraining promoter control(p.122)
- • Foreign exchange volatility affecting international investor returns(p.96)
- • Restricted takeover possibility due to RBI regulatory framework(p.98)
- • Rising interest rates impact on borrower servicing(p.165)
- • Global economic slowdown and inflation pressure(p.160)
- • Regulatory requirement for minimum 50% small-ticket loans(p.169)
- • Weather and agricultural vulnerability in rural-focused portfolio(p.185)
- • High cost of operations in rural centers(p.185)
- • Intense competition from larger players and NBFC-MFIs(p.168)
- • Intense competition from established banks and NBFCs in microfinance sector(p.221)
- • Interest rate risk from exposure to changes in RBI's repo rate(p.218)
- • Liquidity risk from market disruptions affecting deposit availability(p.218)
- • Economic cyclicality affecting credit demand and asset quality in downturns(p.220)
- • Stringent RBI regulatory oversight and prudential norms limiting operational flexibility(p.235)
- • Mandatory shareholding dilution constraints reducing Promoter control(p.235)
- • Mandatory listing requirement creating market dependency and disclosure obligations(p.235)
- • Competitive pressure from expanded eligible participants in money markets and interbank operations(p.235)
- • Complex data protection and customer privacy compliance under DPDP Act(p.243)
- • Regulatory capital requirements and RBI oversight(p.299)
- • Competition from larger banks and financial institutions(p.298)
- • Agricultural sector exposure and weather/monsoon dependence(p.299)
- • Interest rate sensitivity and monetary policy impacts(p.286)
- • Elevated non-performing asset concentrations in specific sectors(p.357)
- • Exposure to customer default and deteriorating asset quality in priority sectors(p.352)
- • Regulatory compliance burden and penalty exposure(p.364)
- • Liquidity risk from concentrated deposit base maturity profile(p.333)
- • Interest rate volatility and RBI monetary policy changes(p.379)
- • Rising deposit costs due to competitive pressure(p.384)
- • Intense competition in Indian financial services industry(p.381)
- • Business correspondent agreement expiration risk(p.378)
- • COVID-19 pandemic impact on loan repayments and credit quality(p.381)
- • Regulatory disputes over service tax classification and registration requirements(p.438)
- • RBI regulatory action and listing mandate compliance pressure(p.457)
- • Potential PFIC status classification creating adverse tax consequences for U.S. investors(p.464)
Promoters
| Name | Role | Pre-Issue | Post-Issue |
|---|---|---|---|
| Kadambelil Paul Thomas | Promoter | 6.94% | — |
| ESAF Financial Holdings Private Limited | Promoter | 62.46% | — |
| ESAF Financial Holdings Private Limited (EFHPL) | Promoter/Corporate Promoter | 62.46% | — |
| Kadambelil Paul Thomas | Promoter/Individual Promoter | — | — |
| PNB MetLife | Selling Shareholder | — | — |
| Bajaj Allianz Life | Selling Shareholder | — | — |
| ESAF Financial Holdings Private Limited | Corporate Promoter | 62.46% | — |
| Kadambelil Paul Thomas | Individual Promoter | 6.94% | — |
| ESAF Financial Holdings Private Limited (EFHPL) | Corporate Promoter | 62.46% | — |
| ESAF Financial Holdings Private Limited | Promoter | 62.46% | — |
| Kadambelil Paul Thomas | Promoter | 6.94% | — |
| Kadambelil Paul Thomas | Promoter | 0.02% | — |
| ESMACO | Promoter Group | 63.49% | — |
| ESAF Financial Holdings Private Limited (erstwhile ESAF Microfinance and Investments Private Ltd.) | Significant Investor | 62.46% | — |
| ESAF Financial Holdings Private Limited (EFHPL) | Corporate Promoter | 62.46% | — |
| ESAF Swasraya Multi-State Agro Co-operative Society Limited (ESMACO) | Promoter Group and Group Entity | 63.49% of EFHPL | — |
| ESAF Financial Holdings Private Limited | Promoter | — | — |
| ESAF Financial Holdings Private Limited | Promoter Selling Shareholder | — | — |
| PNB MetLife India Insurance Company Limited | Selling Shareholder | — | — |
| Bajaj Allianz Life Insurance Company Limited | Selling Shareholder | — | — |
Leadership
Kadambelil Paul Thomas · Managing Director and Chief Executive Officer
Gireesh C.P. · Chief Financial Officer
Ranjith Raj P · Company Secretary and Compliance Officer
Ravimohan Periyakavil Ramakrishnan · Part-Time Chairman
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.
ESAF Small Finance Bank IPO FAQs
What is the lot size of ESAF Small Finance Bank IPO?
The minimum lot size of ESAF Small Finance Bank IPO is 250 shares. One lot costs ₹15,000 at the cut-off price.
When does ESAF Small Finance Bank IPO open and close?
ESAF Small Finance Bank IPO opened for subscription on 03 Nov 2023 and closed on 07 Nov 2023.
What is the listing date of ESAF Small Finance Bank IPO?
ESAF Small Finance Bank IPO listed on 10 Nov 2023.