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Jana Small Finance Bank Ltd IPO

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IPO Synopsis

IPO Synopsis:
Jana Small Finance Bank filed its DRHP worth over Rs.700 crore, with SEBI on 31 March,2021. The DRHP got approved by SEBI on 12 July, 2021. The issue comprises of a fresh issue worth Rs.700 crore and an offer for sale of up to 92,53,659 equity shares. The companies offloading shares in the offer for sale include- Bajaj Allianz Life Insurance Company, Hero Enterprise Partner Ventures, ICICI Prudential Life Insurance Company, Enam Securities, North Haven Private Equity Asia Platinum Pte Ltd, QRG Enterprises and Tree Line Asia Master Fund Ltd. 
This issue is expected to fetch the bank around Rs.1,100 crore. According to the DRHP, the bank is considering a pre-IPO placement of a maximum of Rs.500 crore. This will reduce the fresh issue size. The promoters of the issue are ICICI Securities, Axis Capital and SBI Capital Markets. 

Objectives of the issue:
The main objective of the issue is to use the net proceeds to augment the bank’s Tier-I capital base.
 

About Jana Small Finance Bank Ltd

Incorporated in 2006 and registered as an NBFC on March 4, 2008, Jana Small Finance Bank was awarded the NBFC-MFI status on September 5, 2013. They started operations as a Small Finance Bank  from 28 March, 2018. They have a pan-India presence and have the second most geographically diverse portfolio as of 31 March, 2021. 
As of 28 February, 2021, Jana Small Finance Bank had 611 branches and 134 ATMs which were located 229 districts, 19 states and 3 union territories. In April 2020, the bank launched a full digital self-on boarding platform called DIGIGEN. 
The bank is also a corporate agent for third party life insurances, general insurance and health insurance. They also provide payment gateway services through their merchant acquiring partners.
 

Financials:

Particulars

(In Rs cr)

Q2 ended 30 September, 2020

FY20

FY19

Total Income

1,334.51

2,424.76

1,368.27

PAT

82.44

30.13

-1949

EPS

15.42

5.90

-471.84

 

Particulars

(In Rs cr)

Q2 ended 30 September, 2020

FY20

FY19

Total Assets

15,350

14,147

9,446.3

Total Borrowings

3,365.7

2,898.74

4,086.47

Equity Share Capital

200.73

200.72

197.16

 

Key financial metrics:

Particulars

Q2 ended 30 September, 2020

FY20

FY19

AUM (In Rs cr)

11,263

11,298.7

6,519.6

Gross NPA as a % of gross advances

2.72%

3.16%

8.08%

Credit to Deposit ratio

99.91%

103.18%

148.07%

Net Interest Margin

9.36%

9.81%

5.78%

CRAR

20.09%

19.25%

18.02%

Net Worth (In Rs cr)

1,110.9

1,027.3

660.9

Deposits (In Rs cr)

10,229.9

9,651.9

4,998.7

 

Peer Comparison:

Bank

RoE

Total Income

(In Rs bn)

PAT

Capital Adequacy ratio

GNPA %

AU SFB

22.30%

57.5

1,171

23.40%

2.70%

Equitas SFB

12.70%

36.1

384.2

24.20%

3.70%

Ujjivan SFB

0.30%

31.2

8.3

26.40%

7.00%

Jana SFB

7.80%

27.3

84.3

19.30%

-

Utkarsh SFB

9.40%

17.3

111.8

21.90%

3.70%

ESAF SFB

8.70%

17.7

105.4

24.20%

6.70%

Fincare SFB

11.80%

13.8

113.1

29.50%

3.46%

Capital SFB

9.50%

5.6

40.8

19.80%

2.08%

Suryoday SFB

0.90%

8.8

11.9

51.50%

9.40%

North East SFB

1.90%

3.1

7.2

21.22%

11.58%


The Key points are-

IPO Key Points

  • Strengths

    1.    Jana Small Finance Bank is a new age digitized bank. They have multi channel operations both on mobile and the internet. They also have a video-KYC interface and a digital- on boarding platform called DIGIGEN
    2.    They have an efficient and integrated risk management process
    3.    Jana Small Finance Bank has a pan-India presence and has the second largest presence in the country, as of 31 March,2021. Since 2008, the bank has had 8 million customers and 3.05 million active customers
    4.    The bank has a very rapidly growing retail deposit base and is among the top 4 small finance banks in terms of deposit size
    5.    The bank has a very strong execution ability. They built their deposits from nil in 2018 to Rs.10229.9 crore in as at 20 September 2020
     

  • Risks

    1.    The bank’s business is primarily dependent on unsecured loans and specifically group loans and if there any adverse developments in the microfinance industry, it will materially affect the operations of the business
    2.    A large part of the bank’s asset under management is unsecured and on the occasion that the bank is not able to recover the AUM on time, the operations will be adversely affected
    3.    The stringent norms and regulations that the industry is subject to, if not followed properly, will adversely affect the operations of the bank
     

How to apply for IPO?

  • Login to your 5paisa account and select the issue in the current IPO section

  • Enter the number of lots and price at which you wish to apply for

  • Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange

  • You will receive a mandate notification to block funds in your UPI app

  • Approve the mandate request on your UPI and funds will be blocked

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