Marking a strong debut on the stock exchanges, shares of microfinance lender Equitas Holdings ended up 23% on Thursday. The stock listed at Rs 144 a share, a 31% premium to the issue price of Rs 110.
It hit a high of Rs 147 and a low of Rs 134.15 during the day, before closing at Rs 135.25.
It is the first of the upcoming small finance bank to hit the stock markets in April. The Chennai-based company is backed by World Bank arm International Finance Corp, Sequoia Capital and Helion Venture Partners among a few others
Equitas Holdings IPO was priced in the Rs 109-110 price range and was open between April 5 and April 7. It had raised Rs 2,200 crore through the IPO,which included about Rs 720 crore worth fresh shares and an offer for sale by some of its existing shareholders. The issue was subscribed over 17 times.
It drew strong interest from institutional investors. Equitas had raised Rs 652 crore by selling shares at Rs 110 a piece to anchor investors, which included Franklin Templeton Mutual Fund, Birla Sun Life Trustee Company, ICICI Prudential MF, SBI MF, Kotak Mahindra Life Insurance among others.
“Equitas’ microfinance business has grown at a compounded annual growth rate of 45% over FY2012-nine months FY2016 to Rs 2,935 cr.ore There is a huge untapped opportunity in this segment as microfinance is targeted to the lower income segment which often lacks access to formal financing sources,” said Siddharth Purohit of Angel Broking.
Analysts have also pointed out that the company has a strong management team that can deliver business scalability and they are expecting the company’s transition from a micro-finance lender to a small finance bank to be smooth and meeting 75% of the priority sector lending (PSL) target will not be a challenge given that almost its entire portfolio will qualify for PSL.