MUMBAI: Utkarsh Small Finance Bank has filed a draft red herring prospectus with the Securities Exchange Board of India to raise Rs1,350 crore via an initial public offering (IPO).
The offer comprises a fresh issue of up to Rs750 crore and an offer for sale by Utkarsh Coreinvest Ltd aggregating to Rs600 crore.
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The lender said it may consider a pre-IPO placement of up to Rs250 crore in consultation with book running lead managers.
Proceeds from the issue will be used to augment tier-I capital base to meet future capital requirements. As of September, its CRAR was at 24.87% (Tier I capital of 19.02%).
For fiscal 2020, the lender's total income stood at Rs1,406.24 crore compared with Rs958.25 crore a year ago. Net profit was at Rs186.74 crore against Rs110.87 crore in FY19. Provisions for the period were at Rs163.55 crore.
According to a Crisil report, Utkarsh Small Finance Bank is among the most profitable small finance banks (SFBs) in India and among the leading SFBs in terms of return on assets. It had the highest return on equity among SFBs in India in the last financial year.
As of September, its total deposits stood at Rs5,969.30 crore while advances were at Rs6,606.58 crore. Gross NPAs were at 0.64% while its provision coverage ratio was at 101.99%.
The lender has warned that NPAs may rise going ahead due to several factors, including increased competition, adverse effects on business and results of operations of borrowers, a rise in unemployment, a sharp and sustained rise in interest rate, slow industrial and business growth, changes in customer behaviour and demographic patterns, among others.
"In particular, we could experience a significant increase in our NPA levels due to deterioration in the credit quality of our customers, as our target borrower segment primarily comprises small traders, individuals with micro-enterprises and others belonging to the unorganised sector, who are most impacted due to the economic downturn caused by the COVID-19 pandemic related measures such as closure of non-essential services," the lender said in the DRHP.
It has operations across 18 states and union territories, with 528 banking outlets and 8,729 employees, as of September.
ICICI Securities, IIFL securities, Kotak Investment Banking are the book running managers to the issue.
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