ESAF Small Finance Bank Limited

ESAF SMALL FINANCE BANK LIMITED - IPO DETAILS 

Company Overview 

Established in 1992, the Evangelical Social Action Forum (ESAF) Bank is a small finance bank with a mission to cater to the financial needs of unbanked and under-banked individuals, primarily in rural and semi-urban areas. By 2023, ESAF Bank has established a presence through a network of 700 banking outlets, 767 customer service centers, and 559 ATMs spanning across 21 states and two union territories, where it serves approximately 7.15 million customers.  

The bank effectively manages assets valued at 16,331 Crores. ESAF Bank provides a diverse range of financial products, including micro loans, retail loans, MSME loans, loans to financial institutions, and agricultural loans. Notably, the bank holds a robust presence in Kerala, where 43% of its banking outlets are situated, and it continues to expand its reach in other regions. 

Objective of the IPO 

Here are a few quick reasons why ESAF Small Finance Bank Limited going public:  

1. The funds generated from the Net Proceeds will be earmarked for reinforcing the Bank's Tier-I capital base, with the aim of addressing future capital needs resulting from the expansion of the Bank's assets, particularly its loans and investments. This allocation of funds is also intended to ensure the Bank's adherence to the capital adequacy regulations mandated by the Reserve Bank of India (RBI) as they evolve over time. 

2. the Bank anticipates experiencing various advantages from listing its Equity Shares on the Stock Exchanges. 

Company Financials 

Key Performance Indicator 

Pros 

1. ESAF Bank has exhibited robust growth, as evidenced by its total deposits surging from ₹89.99 Crores in March 2021 to ₹146.65 Crores in March 2023, achieving an impressive compound annual growth rate (CAGR) of 27.66%. 

2. The bank is at the forefront of digital innovation, offering a diverse range of digital platforms, including internet banking, mobile banking, SMS alerts, bill payments, and RuPay-branded ATM cum debit cards. Notably, it has effectively integrated e-signatures for disbursing Micro Loans, with over 0.53 million loans distributed using this technology in Fiscal 2023. 

3. ESAF Bank has established a deep market presence, with a strong focus on the micro loan segment. It caters to 3.5 million customers across 21 states and 2 union territories. What's particularly noteworthy is that approximately 42.3% of its micro loan customers are situated outside of Kerala, showcasing its ability to expand its operations beyond its home state. 

4. The bank's customer-centric approach is a hallmark of its operations. It prioritizes serving customers in rural and semi-urban areas through tailored products and processes designed with the customer in mind. Additionally, it goes the extra mile by providing non-financial services to Micro Loan customers, further enhancing its customer relationships. 

Cons 

1. ESAF Bank's Microfinance Loan business, which primarily serves rural areas, encounters various challenges. These challenges include high customer acquisition costs, the potential lack of financial and product awareness among prospective customers, and the susceptibility of household income to local economic developments. 

2. Another concern lies in the bank's portfolio of unsecured advances, which constituted 75% of its total advances as of 2023. Micro Loans and certain retail loans, lacking collateral, carry a higher credit risk. If these loans cannot be recovered promptly or at all, it could have adverse implications for the bank's financial health, operational results, and cash flows. 

3. There is a geographical concentratin of ESAF Bank's outlets, with more than 62% of them situated in South India, particularly in the states of Kerala and Tamil Nadu. Any adverse economic changes in these regions could potentially have a negative impact on the bank's financial condition, operational performance, and cash flows. 

How to Apply for this IPO 

1. Go to https://ipo.adityatrading.in/ 

2. Enter your Client ID 

3. Enter the OTP received in your registered mobile number. 

4. Choose the IPO and click on apply button. 

5. Enter the UPI ID, Quantity, and Cut off the price. 

6. Click on submit button 

7. Confirm the mandate request received on your phone by entering the UPI Pin. 

You can also watch our youtube video on “How to Apply on IPO” by clicking on the link “https://www.youtube.com/watch?v=1qOI8dCpl1I&ab_channel=ATS”