Jana Small Finance Bank IPO

Jana Small Finance Bank, founded in 2006, is set to launch its IPO from February 7 to February 9, 2024. Offering a range of secured and unsecured loans, the bank has expanded rapidly, operating over 750 branches across 22 states and strongly emphasising financial inclusion. As of March 31, 2023, it has served nearly 12 million customers and employs a permanent staff of 18,184.

The IPO details include a price range of Rs. 393 - Rs. 494 per share, with a total issue size of Rs. 570.00 CR. The reservation is allocated as 50% for institutional investors, 15% for non-institutional investors, and 35% for retail investors. The listing is scheduled for February 14, 2024, on BSE and NSE.

In terms of financials, as of September 30, FY 23, the bank boasts total assets of Rs. 28,105.87 Crore, total revenue of Rs. 3,699.88 Crore, and a Profit After Tax (PAT) of Rs. 255.97 Crore. Net worth stands at Rs. 1,777.07 Crore, and total borrowings amount to Rs. 6,277.46 Crore.

Jana Small Finance Bank has a majority of its banking outlets in metro areas (60.81% as of Sep 30, FY 23), showcasing its urban presence. Net Interest Margins (NIMs) for FY 23 at 7.78% compare favorably with peers, reflecting consistent growth.

The IPO aims to raise funds for growth, expansion, and compliance with RBI regulations. Promoters, including Jana Capital Limited and Jana Holdings Limited, hold a pre-issue stake of 25.20%.

Evaluation of the IPO suggests an attractive price range, with a P/E ratio of 8.72x based on FY23 EPS and 15.20x based on weighted EPS of the last three years. Comparative analysis with listed peers indicates undervaluation compared to the industry average P/E of 93.03x.

Strengths include significant loan and deposit growth, ranking fourth among Small Finance Banks, digitalized services, strong risk management, and a recognised brand. However, potential weaknesses include high credit risk, legal issues, revenue concentration, and regulatory challenges.

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