Shares of Equitas Small Finance Bank made a tepid debut in Mumbai trading on Monday, as the scrip got listed at Rs 31, a 6.06 percent discount to its issue price of Rs 33.


                        


The IPO, which was sold between October 20 and 22, was subscribed 1.95 times in the three-day bidding process, much less compared with the issues that hit the market prior to it. The HNI quota of shares in the IPO remained undersubscribed at 22 percent.

At the issue price, the stock was valued at 1.3 times trailing 12-month price to book value (post IPO basis).


The IPO could not draw higher subscription level as investors feared further stake reduction by promoters soon to meet RBI's regulatory requirements. RBI rule requires Equitas Holdings NSE -1.39 % to pare stake in the SFB to 40 percent by September 2021, when it completes five years of operations.

US elections scheduled for November 3 and the recent volatility in domestic stocks also weighed on the IPO performance. Data showed BSE Sensex lost 908 points in the previous three sessions.


Peer Ujjivan SFB, which got listed in December 2019 at a huge premium, currently trades below issue price, which was another turn off for investors.


Analysts said Equitas SFB has a diversified loan book and the best Casa ratio among the SFBs, but the return ratios remain subdued with gross NPA above 2.5 percent for last three years. They fear the fresh formation of bad loans from the moratorium book could keep provisions high and compress return ratios.