Is Capital Small Finance Bank a Profitable Unlisted Buy?

Are you considering investing in Capital Small Finance Bank unlisted shares and wondering about the potential profitability? Founded as India's first Small Finance Bank in April 2016, after its conversion from Capital Local Area Bank, this SFB rapidly grew by providing modern banking facilities to rural regions at a low cost. The bank's 7-Day branch banking service with extended hours and a focus on serving the common people has given it a competitive edge over other banks in the region.

Since its transition, the bank has witnessed exponential growth, with 172 operational branches and an expanding footprint into Delhi, Haryana, Rajasthan, Himachal Pradesh, and the Union Territory of Chandigarh. Moreover, the Scheduled Status granted by the Reserve Bank of India further solidifies its position. With a total business crossing Rs. 12,000 crores and significant lending to small borrowers, Capital Small Finance Bank Ltd holds promising potential for investors seeking to capitalise on its upward trajectory.

Recent Fundings To Small Capital Finance Bank

Capital Small Finance Bank, after introducing India’s first small finance bank, has recently secured a significant equity investment from Max Life Insurance Company Limited, further building its position in the financial aspect. This strategic move involves Max Life Insurance being allotted 10.58 lakh equity shares for a total consideration of Rs 49.5 crore, with each share having a face value of Rs 10 and an added premium of Rs 45o per share.

On top of that, with SEBI's approval, the bank is gearing up for an initial public offering (IPO) to raise fresh capital amounting to Rs 450 crore, building on the momentum from the Rs 1,600 crore valuation achieved through its recent equity investment. This influx of funding is set to fuel the bank's growth further and diversify its offerings, solidifying its standing as a key player in the financial sector.

Reasons To Invest in Capital Small Finance Bank Pre IPO Shares

Investing in Capital Small Finance Bank pre-IPO shares presents an enticing opportunity for several reasons:

• Strong Asset Quality: Capital Small Finance Bank held leading positions in asset quality metrics, demonstrating the bank's ability to manage its loan portfolio efficiently.

• Stable Financial Performance: Among Small Finance Banks (SBFs), Capital Small Finance Bank stands out with its consistent and steady financials, providing investors with confidence in the bank's performance.

• Low Non-Performing Assets: The bank boasts the lowest Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) at 2.08% and 1.13%, respectively, signifying its prudent risk management practices.

• Resilience During Disruptions: Capital Small Finance Bank has proven its resilience during major disruptive events, exhibiting a continuous growth trajectory in deposits even amidst challenging economic conditions.

• Impressive Growth Ratio: Notably, the bank has consistently outpaced both public and private sector banks, displaying a higher growth rate over the period from 2017 to 2021.

Considering these compelling factors, investing in Capital Small Finance Bank pre-IPO shares offers a potential opportunity for investors to capitalise on the bank's promising growth prospects and solid financial foundation.

Capital Small Finance Bank Unlisted Shares: Exponential Growth Potential For Investors

Capital Small Finance Bank unlisted shares price today stands at Rs. 450 per share. As of 2023, the face value per share stands at Rs. 10.0, while the book value per share is at Rs. 82.8. The bank has 34.0 million outstanding shares, resulting in a market capitalization of Rs. 13,940.0 million. The debt-to-equity ratio is 12.9, indicating the bank's level of financial leverage.

The dividend per share is Rs. 1.0, with a dividend yield of 0.3% based on the current market price. Capital Small Finance Bank's return on total assets (ROA) is 0.9%, while the return on equity is 12.1%. The Return on weighted capital stands at 10.3%. These key indicators provide valuable information for investors to assess the bank's financial performance and potential for growth.

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FAQs

1. What is the IPO size of Capital Small Finance Bank?

On October 30, 2021, Capital Small Finance Bank submitted its DRHP to SEBI, and it is currently awaiting approval. The IPO consists of an initial public offering (IPO) of up to 3,840,087 equity shares and a fresh issue of Rs. 450 crore.

1. Is Capital Small Finance Bank under RBI?

In accordance with Section 22 (1) of the Banking Regulation Act, 1949, the Reserve Bank granted the bank a licence to operate as a small financing bank in India.

1. Who are the shareholders of Capital Small Finance Bank?

Capital Small Finance Bank's shareholders include individuals such as Sarvjit Singh Samra, Amarjit Singh Samra, Surinder Kaur, Navneet Kaur, Shahbaz Singh Samra, Mohan Singh Johal, Tanveer Singh Dhillon, Santokh Singh Chokkar, Shangara Singh, and others. The distribution of ownership varies, with the highest shareholder holding 12.3% and the remaining shareholders collectively owning 74.0%.

1. Which is the oldest small finance bank in India?

Capital Small Finance Bank was established in April 2016 as India's first small finance bank and is based in Jalandhar.

1. What is the share capital of Capital Small Finance Bank?

The businesses must have a minimum capital of Rs. 200 crore ($13 million).