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Suryoday Small Finance Bank made a tepid listing on the stock exchanges today. Shares of the small finance bank opened at Rs 292 per share on the National Stock Exchange, Rs 13 lower to the issue price of Rs 305 marking a discount of 4.26%. On the BSE, it opened at Rs 293, at a discount of 3.93%.
In noon trades, the share slipped further from its opening price to Rs 282.90 losing -7.25% down by Rs 22.10. It made an intraday high of Rs 295.95 and a low of Rs 271.15, on the BSE. Giving no opportunity for exiting with listing gains.
Commenting on discount listing independent market expert, Ambareesh Baliga said “the bank has witnessed decent growth in the past with the IPO proceeds coming in the bank is well capitalized with 25% liquidity in its balance sheet. This will help the bank to expand its loan book and earn a higher rate of interest compared to funds placed with RBI. Deposits base is also rising fast it has the fastest-growing deposits base among small finance banks. So investors should stay put and hold the stock for long-term.”
Shikher Jain, Fundamental Equity Research at Anand Rathi Shares & Brokers also has similar views on the stock. “Suryoday saw tepid listing due to volatile market conditions. Current valuations give a good entry point for investors from a long term perspective and investor who were allotted can also look at averaging the stock,” said Jain.
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. 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 Centers.
“With COVID-19 cases rising one needs to closely watch the disbursement trends, asset quality, provisioning and growth trajectory the bank delivers going forward. Valuation is not cheap for Suryoday,” said Mayuresh Joshi, Head of Equity Research of William O’Neil.
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