ET Intelligence Group: Jana Small Finance Bank (JSFB) plans to raise ₹462 crore through fresh equity to augment capital base and up to ₹108 crore through an offer for sale by some of the existing investors. The promoter Jana Holdings’ stake will fall to 22.5% after the IPO from 25.2%. Ramesh Damani, Ashish Kacholia, Vallabh Bhansali are some marquee investors in JSFB.
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It has been improving the share of secured loans in the loan book over the past few years. Its loan book is spread across multiple states with a lesser geographical concentration. Given these factors and a reasonable valuation, investors with a long-term view may consider the IPO.
Business
JSFB, started in March 2018, provides micro financing, secured business loans, loans against property, micro, small and medium enterprises (MSME) loans, loans against deposits and gold, and loans to finance companies. It has presence in 22 states and two Union territories. The secured loans formed 57.4% of the gross loans worth ₹21,347 crore as of September 2023 compared with 42.9% in FY21.
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Remaining 42.6% loans were unsecured and included 16.9% of the agriculture-related portfolio. The share of top 3 states including Tamil Nadu, Maharashtra, and Karnataka in advances reduced to 38.2% as of September from 52.3% in FY21.
Financials
Gross advances increased to ₹18,000.7 crore in FY23 from ₹11,839 crore in FY21. Net interest income (NII) increased by 14.6% annually to ₹1,660 crore between FY21 and FY23 while net profit shot up by 88.2% to ₹256 crore. Net interest margin moderated to 7.3% from 8.4% during the period.
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Valuation
JSFB demands (P/B) multiple of up to 1.4. Some SFBs including ESAF SFB and Utkarsh SFB trade at P/B of 1.8 and 2.3, respectively.
