AU Small Finance Bank

It was Equitias Small Finance Bank and Ujjivan Small Finance Bank which had set up their Small Finance Banks during last year.  Now, AU Small Finance Bank is the third SFB which is a retail-focused non-banking finance company (NBFC) converted itself in to a small finance bank in April this year.  RBI had granted license to AU Small Finance Company along with ten other entities, in September 2015, to set up small finance banks.

The three important major products of AU Small Finance Bank are:

  1. Vehicle Loans,
  2. MSME Loans and
  3. SME Loans.

Out of this, vehicle loans comprised more than half of their assets management portfolio.

Now, AU Small Finance has entered the stock market with an issue of over Rs. 1,900 crore which is one of the largest issues to hit the capital markets in the calendar year 2017.  What are its features?

  1. The issue has been oversubscribed 55 times.
  2. This shows a strong corporate governance, transparency, systems and the management teams’ efficiency.
  3. The stocks were seen quoted at 50 per cent more than its issue price.
  4. The reason is also attributed to heavy demand from foreign institutional investors (FIIs) after the IPO created investment legroom. Before the IPO, FII holding in the company was 49 per cent which has now dropped to 39 per cent.

Concern:

The company’s stock price is valued at nearly five times its adjusted book value, however, the the stock is considered to be expensive compared to its standing.

Author: Admin Bankedge

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