Jana Small Finance Bank IPO Review

Jana Small Finance Bank IPO Review is about to go public. The IPO will open for subscription on February 7, 2024 and will close on February 9, 2024. In this article, we look at Jana Small Finance Bank Limited IPO Review 2024 and analyze its strengths and weaknesses. Read on to find out!

Jana Small Finance Bank IPO Review

About Us

Jana Microfinance Bank was established on July 24, 2006 and registered as a Non-Banking Finance Company (“NBFC”) on March 4, 2008 and was granted Non-Banking Finance Company-Microfinance Institution (“NBFC-MFI”) status. September 5, 2013. It began operations as a small finance bank on March 28, 2018, and was converted to a commercial bank on July 16, 2019.

As of September 30, 2023, Jana Small Finance Bank ranks as the 4th largest small finance bank based on assets under management (AUM) and deposit size. The bank operates 771 banking branches across 22 states and two union territories, including 278 branches in unbanked rural areas. Jana Small Finance Bank has amassed nearly 12 million customers since its inception in 2008 and boasts 4.87 million active customers as of September 30, 2023.

Jana Small Finance Bank offers a wide range of secured loan products including secured corporate loans, micro loans against property (“Micro LAP”), MSME loans, affordable housing loans, NBFC term loans, term deposit loans, two-wheeler loans and gold loans. . The Bank also offers unsecured loan products such as individual and small business loans, agricultural and allied loans, and group loans based on the Joint Liability Group (“JLG”) model designed specifically for women’s organizations.

industry information

The Reserve Bank of India (RBI) introduced small finance banks in 2015 to enhance financial inclusion, especially in rural and semi-urban areas. Of the 10 institutions that received in-principle approval, eight were selected as microfinance institutions with a track record of providing services to low-income groups. Notably, AU SFB and Capital SFB are the only non-NBFC-MFIs to have received an SFB licence. They are empowered to operate in adjacent regions, mobilize rural savings and promote local investment to advance financial inclusion.

Since its inception, the small finance bank has experienced a compound annual growth rate (CAGR) of 10% in semi-urban and rural areas from FY15 to FY23. Their total deposit base has doubled to around Rs. 37,500 crore by FY19, surging at around 48% CAGR to reach Rs. 1.6 lakh crore by FY23. CRISIL MI&A expects deposits from SFBs to grow at a CAGR of 40-45% by FY25.

Assets under management (AUM) of small finance banks recorded 29% CAGR during FY18-23, CRISIL MI&A enables most SFBs to complete the transformation phase and benefit from operating leverage.

Gross non-performing assets (NPAs) hit a high of 3.8% in FY20 due to loan defaults due to the pandemic. However, NPAs continued to decline to a record low of 2.8% in FY23, with the Eastern and Southern regions reporting the highest NPAs at 3.4%. The Northeast region in particular has made significant progress, with NPAs decreasing from 6.6% and 6.3% to 2.2% and 3.4%, respectively.

Jana Small Finance Bank: FinanceS

A review of Jana SFB Limited’s financials reveals notable trends. Between March 2021 and March 2023, bank deposits surged from Rs. 12,316 crores ~ Rs. 16,334 crores, which could mean an increase in account openings.

At the same time, the advance increased from Rs. 11,600 crores in FY21 to Rs. Interest income will increase to $1,775.9 billion in FY23, signaling growth for the bank as a whole. Additionally, reserves and surplus increased from 10 million won to 10 million won. 914 crore in FY21 to Rs 1.472 billion in FY23, which acts as a positive buffer against unexpected losses such as defaults.

With regard to non-performing assets, Jana SFB Limited reported that gross NPAs decreased from 7.24% in FY21 to 3.94% in FY23 and net NPAs decreased from 5.33% to 2.64% in the same period. This indicates a decline in defaults in FY23 compared to FY21.

On the revenue front, the bank’s total revenue increased from Rs. 2,498 crores in FY21 to Rs. There was a significant increase in total profit of Rs 3,075 crore in FY23. 72 crores to Rs. It earned $25.6 billion over the past three years.

the company’s balance sheet

Company’s income statement

The company’s key indicators

key playis

Below is a list of Jana Small Finance Bank’s associates.

Company Strengths

• Pan-India presence with strong brand awareness: Jana SFB Limited’s extensive network of 771 bank branches across 22 states and two union territories, including 278 in unbanked rural areas, reduces concentration risk and enhances market reach.

• Jana is a digital bank.: Most of the banking services are provided to customers in digital format. It is a digitally advanced bank that uses integrated operations and cutting-edge technology to automate core processes.

• Expansion of retail deposit portfolio and expansion of various deposit franchises: We offer a variety of deposit products, including current accounts, savings accounts, and term deposits, with competitive interest rates, and deposits have steadily increased, reaching ₹189,367.24 million as of September 30, 2023.

• 16+ years Experience servicing underbanked and underserved customers: Jana specializes in servicing underbanked and underserved customers, especially in the MSME sector. Promotes financial inclusion by providing a range of lending options and banking services in urban and rural areas.
• Professional and experienced management and board of directors: The Bank has an experienced Board of Directors comprising members with diverse business experience, many of whom have held senior positions in renowned financial services institutions and banks, including RBI.

company’s weaknesses

• A high illiquidity ratio means that a bank holds a limited amount of liquid assets, which affects its ability to pay its debt and short-term liabilities.
• A low core deposit ratio means that the bank holds fewer assets backed by deposits, which means less liquidity. Failure to increase our core deposit ratio could have a negative impact.
• Banks extended new loans to microfinance borrowers with previous NPAs, offsetting previous NPAs with the proceeds of these new loans. These practices risk deteriorating asset quality and increasing credit risk.
• The Company is exposed to interest rate risk, which adversely affects its net interest margin, negatively impacts its net interest income and, in turn, negatively impacts its operations and cash flows.
• In the past, banks have failed to comply with certain covenants set out in their financial contracts. Unless waived, failure to comply with any of these agreements may constitute a default. This can have a variety of consequences, including accelerating the repayment schedule, securitizing assets, and stopping further withdrawals.

Jana Small Finance Bank: GMP

Shares of Jana Small Finance Bank Ltd. were trading at a premium of 26.09% in the gray market as of Feb 05, 2024. The stock in Gray Market was trading at Rs 522. This gives a premium of Rs 108 per share over the ceiling price. Rs 414.

Key IPO Information

promoter: Jana Capital Limited and Jana Holdings Limited

Book Operations Lead Manager: Axis Capital Limited, ICICI Securities Limited and SBI Capital Markets Limited

proposal registrant: KFin Technologies Limited

purpose of the problem

The bank plans to utilize the net proceeds from the IPO for the following purposes:

• We are increasing the bank’s Tier-1 capital base to meet future capital requirements.
• Improve Tier-I capital and CRAR.
• To cover the costs incurred due to the matter.
• Increase banking activities, mainly lending.

conclusion

In this article, we have looked at Jana Small Finance Bank Limited IPO Review 2024 details. Analysts remain divided over the IPO and its potential profits. This is a great opportunity for investors to research the company and analyze its strengths and weaknesses. This is about Jana Small Finance Bank. Before concluding this article, it is important to note that on February 7th two small finance banks will be offering their shares to the market. Both Capital and Jana are scheduled to be listed on the exchange on February 14th. So, I hope you do your IPO research well and compare the two banks to make the best choice. Which bank are you applying to for your IPO? Let us know in the comments below.

Written by Ashish

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