Small Finance Banks and NBFCs that are Trading 26-44% Below Issue Prices

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Small Finance Banks and NBFCs that are Trading 26-44% Below Issue Prices

By Aditya Raghunath

Investing.com -- It’s been a tough 18 months for the financial sector, particularly for smaller financial institutions like small finance banks and small NBFCs (non-banking financial companies). Quite a few of them which listed in the recent past are trading below their issue prices.

Suryoday Small Finance Bank Ltd (NS:) with an issue price of Rs 305 in March 2021 is currently trading at Rs 201.45, down 34%. Ujjivan Small Finance Bank Ltd (NS:) got listed in December 2019 at an issue price of Rs 37. The stock is down by 44.5%, trading at Rs 20.5. Spandana Sphoorty Financial Ltd (NS:) got listed in August 2019 at an issue price of Rs 856. The stock has tanked by 26% is currently trading at Rs 634.

The reason for this is the pandemic’s impact on the financial books of these companies. Asset quality of these companies has taken a severe hit in the last few quarters. Suryoday SFB booked a loss of Rs 48 crore for the June Quarter as asset quality was increasingly stressed. Lockdowns put severe stress on the micro-banking sector, and Ujjivan Small Finance Bank witnessed a sharp rise in non-performing assets (NPAs). There were several top-level resignations as there were differences in how to provision against bad loans.

Spandana’s quarterly net profit came in at Rs. 53.95 crore in the June 2021 quarter, down 8.46% from Rs. 58.93 crore in the June 2020 quarter.

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