Fino Payments Bank IPO: Fast growing fintech company Fino Payments Bank’s IPO will open tomorrow on October 29. The price band of Rs 560-577 per share has been fixed for this IPO of Rs 1200 crore. This IPO will get an opportunity for subscription till November 2. Under the issue, about Rs 300 crore equity shares with a face value of Rs 10 will be issued and shares worth about Rs 900 crore will be sold by existing shareholders under OFS (Offer for Sale). Its shares can be listed on November 12. According to market experts, it can be invested for long term.
In the last year 2020, the Ministry of Electronics and Information Technology placed Fino Payments Bank at the third place among the banks increasing digital transactions in the country. At the same time, according to Crisil, it has the largest network of micro-ATMs across the country and in FY21 it was ranked third in terms of increase in deposit rates.
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This is the opinion of market experts
- According to Abhay Doshi, founder of UnlistedArena.com, there is no activity in the gray market regarding this IPO, but on the news of the IPO coming, the shares of its parent company Fino Paytech have strengthened up to four times this year in the unlisted market. Its shares are currently at a price of around Rs 420. According to Doshi, there is a lot of growth potential for Fino Payments Bank, but given the pricing of the IPO, the chances of listing gains are less or may be very less. According to Abhay Doshi, its business model is unique and its management is also better, due to which it can be invested for long term. Fino Payments Bank is the only company in its sector which will be listed in the market after the success of the IPO.
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- According to brokerage firm Reliance Securities, the IPO of Fino Payments is at 31.9 times the book value of FY21, which looks stretched. More than 95 per cent of the company’s revenue comes from fees and commissions and its growth is largely dependent on the growing share in the digital payments segment in the country. According to Reliance Securities, digital payments are expected to grow at a CAGR (compound annual growth rate) of 25-27 per cent between FY 2021-2025 and may cross Rs 3500 lakh crore in FY2025. It can capitalize on the growing digital payments opportunities in the years to come, on the back of a strong digital platform and the resources it has built over the past two years. However, Reliance Securities believes that given the current valuation of the IPO, the chances of a great return on investment in the medium term are not low.
Highlights of Fino Payments Bank IPO
- This IPO of about Rs 1200 crore will be open from October 29 to November 1.
- The price band for the IPO has been fixed at Rs 560-577 per share.
- The company has fixed a lot of 25 shares to subscribe to the IPO. This means that according to the upper price of the price band, investors will have to invest at least Rs 14425.
- 75 per cent of the issue is reserved for qualified institutional investors, 15 per cent for non-institutional investors and 10 per cent for retail investors.
- Maximum 5% of the issue is reserved for eligible employees.
- The money raised through the IPO will be used to raise the bank’s Tier-1 capital to meet its future capital requirements. The company’s Tier 1 capital ratio was 56.25% in FY21.
- Kefintech Private Limited has been appointed as the Registrar for the issue.
- Axis Capital, CLSA Capital, ICICI Securities and Nomura Financial Advisory & Securities are the book running lead managers of the issue.
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Company related details
- It is a fintech company that offers a variety of financial products and services.
- The focus of the company is mainly on digital and payment related services.
- As per the data available till 30 June 2021, it has a presence through 7,24,671 merchants across the country. Apart from this, it has 54 branches, 130 customer service points and 17430 active business correspondents across the country.
- In the last year 2020, the Ministry of Electronics and Information Technology placed Fino Payments Bank at the third place among the banks increasing digital transactions in the country. At the same time, according to Crisil, it has the largest network of micro-ATMs across the country and in FY21 it was ranked third in terms of increase in deposit rates.
- About 43.49 crore transactions were done through this platform till March 2021. The total value of all these transactions was Rs 1.33 lakh crore.
- Talking about the financial performance of the company, it received revenue of Rs 791.03 crore in FY 2021, while it was at Rs 691.40 crore in FY 2020.
- In the last financial year 2021, Fino Payments Bank had a net profit (Profit After Tax) of Rs 20.47 crore while in its last financial year 2019-20, it had a loss of Rs 32.04 crore. The company’s profitability position has improved steadily in the last three financial years. The company’s loss in the financial year 2019 was Rs 62.38 crore.
(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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