Equitas Small Finance Bank First Day Listing Remains Sluggish

The shares of Equitas Small Finance Bank (ESFB) ended at ₹32.75 on its first day of listing on the BSE Exchange. It was down by 0.76 per cent compared to its issue price. ESFB on the BSE exchange opened at ₹31 per share and touched a high of ₹33.05 during intraday.

“Investors are expected to wait to know the full impact of credit costs on businesses due to COVID-19 before investing. The stock is unlikely to close above the issue price in the near term given the current market conditions and COVID-19 related uncertainties in lending businesses,” says Deepak Jasani, Head of Retail Research, HDFC Securities.

The price band of the offer by ESFB was fixed at ₹ 32 to ₹ 33 per equity share. The initial public offer (IPO) was in the range of ₹ 501.9 crore and ₹ 517.6 crore. ESFB’s IPO was fully subscribed. Retail investors’ subscription was 2.12 times the offer.

“We expect muted stock performance going ahead as high provisioning cost and reducing Net Interest Margin (NIM) will weigh on profitability and thereby impacting Return on Equity (RoE) adversely which was already in single digit at 9.7 per cent in FY2020,” says Satish Kumar, Research Analyst, Choice Broking. ESFB is the second largest small finance bank (SFB) in India in terms of total deposits as per FY2019.

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