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IPO Analysis: Suryoday Small Finance Bank

Ganesh V
/ Categories: Trending, IPO Analysis
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IPO Analysis: Suryoday Small Finance Bank

IPO rating- Invest for listing gains 

About the issue 

The company is entering the capital market with its initial public offering (IPO) of equity shares of the face value of Rs 10 each. The public issue comprises a fresh issue of equity shares worth Rs 248.58 crore and offer-for-sale (OFS) of up to Rs 333.76 crore. The price band of the issue has been fixed at Rs 303 to Rs 305 per equity share. The IPO opens on March 17 while it closes on March 19, 2021. The issue may list on March 30, 2021. The IPO market lot size is 49 shares. A retail-individual investor can apply for up to 13 lots. The quota for retail investors in the initial public offer (IPO) has been fixed at 25 per cent of the net offer. The QIB quota is fixed at 50 per cent while the HNI quota at 15 per cent. The objective of the issue is to utilise the net proceeds from the fresh issue towards augmenting the bank's tier-1 capital base to meet the future capital requirements. 

Suryoday Small Finance Bank Limited 


Issue open 

March 17, 2021 – March 19, 2021 

Issue type 

Book built issue IPO 

Issue size 

Equity shares of Rs 10
(aggregating up to Rs 582.34 crore) 

Face value 

Rs 10 per equity share 

Issue price 

Rs 303-Rs 305 per equity share 

Market lot 


Min. order quantity 


Listing at 



About the company 

Suryoday is a scheduled commercial bank. It had commenced banking operations in 2017. Suryoday offers a full suite of banking solutions. It has a team of 4,500 people, which operates from over 525 banking outlets spread across 12 states and union territories. The small finance bank has over 20 institutional investors including development funds and private equity investors. As of March 2020, the net worth of the bank stood at around Rs 1,000 crore with a capital adequacy ratio of 30 per cent. It has a deposit base of more than Rs 2,800 crore and a gross loan portfolio of around Rs 3,700 crore. Bank operations are largely in urban and semi-urban areas because of higher income earning capabilities and employment opportunities in such areas compared with rural zones. 


Diversified asset portfolio with a focus on retail operations. 

Leveraging emerging technologies to enhance digital footprint in the banking industry. 

Strong financial performance and cost-efficient operations. 

Fast-developing network in deposit franchise. 

Strong credit processes and robust risk management framework for customers. 


As of March 2020, its CAR was at 29.57 per cent (tier I capital of 28.61 per cent) and was the highest among all small finance banks. As of March last year, Suryoday Small Finance Bank's gross bad loans totalled Rs 101.25 crore, which made for 2.79 per cent of gross advances, while net non-performing assets were at Rs 20.37 crore, or 0.57 per cent of net advances. For FY20, the lender's net interest income was at Rs 490.90 crore against Rs 340.37 crore, a year ago. Net profit stood at Rs 111.20 crore versus Rs 90.40 crore last year. Advances for the period stood at Rs 3,531.94 crore from Rs 2,679.58 crore while deposits were at Rs 2,848.71 crore compared with Rs 1,593.42 crore, a year ago.

Financial performance (Rs in crore) 





9M FY2021 











Net income 





Net margin (per cent) 






Valuation & recommendation  

On the upper price band of Rs 305 and EPS of Rs 13.3 for FY20, the price-to-earnings ratio works out to be 23x. For the last three years, the average earning per share is Rs 11.33 while the price-to-earnings ratio is 27x. If we annualise the last 9 months EPS for FY21, the price-to-earnings works out to be 38x. The listed industry peers of Suryoday Small Finance Bank are Ujjivan Small Finance Bank, Credit Access Grameen Ltd, Spandana Sphoorty Financial Ltd, Bandhan Bank Ltd, and AU Small Finance Bank. The highest industry P/E stands at 48.34x (AU Small Finance Bank) while, the lowest at 12.14x (Spandana Sphoorty Financial Ltd). Therefore, the average industry P/E is 25.15x. Suryoday is amongst the leading SFBs in India in terms of NIMs, RoA, yields, and deposit growth with the lowest cost-to-income ratio.  The P/BV was 2.28, which seems to be reasonable with respect to its peers. The management quality of the company is very good, and it also has good backing from institutional investors. The bank has tied up with various payment banks in India and has been able to leverage its liaison with such payment banks to grow its deposit base. SSF Bank has generated strong revenue growth in the last 3 years and 9 months. SSF Bank’s margins have increased YoY in the last 3 years and 9 months. Looking at the above positives, we believe that the company will keep growing its business at a healthy rate, and hence, you can invest for a listing gain. 

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