Suryoday Small Finance Bank IPO worth ₹581 crore opens today – should you subscribe?

• Suryoday Small Finance Bank initial public offer (IPO) worth ₹581 crore has gone live today, and it will be open for subscription till March 19.
• The price band is fixed at ₹303-305, and each lot consists of 49 equity shares.
• Analysts are bullish on the bank, pointing to its strong credit processes, strong financial performance and cost-efficient operations.
• The bank has proposed to use the proceeds of the IPO towards boosting its Tier-1 capital base to meet future capital requirements.

Suryoday Small Finance Bank (SSFB) has kicked off its initial public offer (IPO) worth ₹581 crore today, March 17. It joins companies like Anupam Rasayan, Craftsman Automation, EaseMyTrip, MTAR Technologies among others that went public this year.

The Suryoday Small Finance Bank IPO is now open and will be live till March 19, with a price band of ₹303-305. Each lot consists of 49 shares. A total of 1.9 crore shares are available for subscription in the IPO.

50% of the issue is reserved for qualified institutional buyers (QIB), 15% for non-institutional bidders and the remaining 35% for retail investors.

The proceeds of the IPO are proposed to be used for boosting the bank’s Tier-1 capital base to meet future capital requirements. Tier-1 capital refers to the core capital of a bank that consists of equity shares and retained earnings. It is used to measure the bank’s financial strength and its capital adequacy.

Analysts are mostly bullish on the IPO.


“Suryoday Small Finance Bank is among the leading SFBs in India in terms of net interest margins, return on assets, yields and deposit growth and had the lowest cost-to-income ratio among SFBs in India in fiscal 2020,” a report by Axis Capital said.

One of the measures to evaluate SSFB’s performance is yield to gross loan portfolio. This measures the bank’s ability to generate income such as interest, fees, and commissions from the loans it has issued.


Source: Axis Capital

Note: *Data up to December 31, 2020.

“SSFB has been growing tremendously since the conversion as an SFB and is currently in a robust financial position that will enable them to expand their business quickly,” stated a report by Anand Rathi Research.

What is the business of Suryoday Small Finance Bank?

SSFB currently provides a wide range of products and services, including housing loans, commercial vehicle loans, micro business loans, unsecured micro and small enterprise loans, among others.

Explaining the extent of SSFB’s operations, a HDFC Securities reported states, “As of December 31, 2020, SSFBL’s customer base was 1.44 million and its employee base comprised 4,770 employees and it operated 554 Banking Outlets including 153 Unbanked Rural Centres.”

SSFB commenced its microfinance operations in 2009. It received the small finance bank (SFB) licence from the Reserve Bank of India (RBI) in 2016.

Prior to getting approval to operate as a small finance bank from the Reserve Bank of India, SSFB operated as a non-banking finance corporation and offered small ticket-size loans to women from weaker sections of the society.

SSFB serves customers in the unbanked and underbanked categories. It has been serving these segments for over a decade now.

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