ESAF Small Finance Bank IPO debuts up 18.33%, later moderates

ESAF Small Finance Bank IPO, starts smart, ends lower

ESAF Small Finance Bank IPO had a robust listing on 10th November 2023, listing at a smart premium of 18.33%, but it failed to hold on to the listing gains and tapered towards the close of trade on 10th November 2023. While the closing price on 10th November 2023 was still above the IPO issue price for the day, it closed below the listing price of the IPO. For the day, the Nifty closed 30 points higher while the Sensex closed a full 72 points higher. Both the Nifty and the Sensex had a volatile day of trading and eventually closed the day in the green, after being in the red for most part of the day. The volatility in the indices had an impact on the stock price performance of ESAF Small Finance Bank in the sense that the stock came under pressure in the second half of the day, despite a very strong opening.

IPO subscription and pricing details for ESAF Small Finance IPO

The stock had seen a very strong subscription in the IPO. The subscription was 77.00X  overall and QIB subscription was at 182.66X. In addition, the retail portion had got subscribed 17.86X in the IPO while the HNI / NII portion also got a healthy subscription of 88.81X. Hence the listing was expected to be fairly strong for the day. However, while the listing was strong, the post listing performance was not up to the mark. Remember, the circuit filter for most mainboard IPOs is kept at 20% above and below the listing price of the day on the day of listing. In the case of ESAF Small Finance Bank Ltd, the strong subscription allowed price discovery at the upper end of the band and got a good listing, but the close was less than satisfactory. Here is the ESAF Small Finance Bank Ltd listing story on 10th November 2023.

The IPO price was fixed at the upper end of the band at ₹60 per share which was anyways along expected lines considering the relatively strong subscription in the IPO. The price band for the IPO was ₹57 to ₹60 per share. On 10th November 2023, the stock of ESAF Small Finance Bank Ltd listed on the NSE at a price of ₹71.00 per share, a strong premium of 18.33% above the IPO issue price of ₹60 per share. On the BSE also, the stock listed at ₹71 per share, a premium of 18.33% over the IPO issue price of ₹60 per share.

How the stock of ESAF Small Finance Bank IPO closed on both exchanges

On the NSE, ESAF Small Finance Bank Ltd closed on 10th November 2023 at a price of ₹68.80 per share. That is a first day closing premium of 14.67% on the issue price of ₹60 per share. However, it marks a discount of –3.10% below the listing price of ₹71 per share. In fact, the listing price turned out to be between the high price and the low price of the day. On the BSE also, the stock closed at ₹69.05 per share. That represents a first day closing premium of 15.08% above the IPO issue price. However, the closing price for the day was at a discount of -2.85% on the listing price on the BSE at ₹71 per share. On both the exchanges, the stock listed strongly above the IPO issue price and also managed to close Day-1 above the IPO issue price. However, the pressure of selling was visible on the counter in both the stock exchanges. In fact, on the NSE and the BSE, the opening price turned out to be the mid-point of the day. On the other hand, the closing price was much closer to the low price of the day, showing a lot of weakness in the counter post listing.

Remember, that the company is subject to 20% circuit filters on both side. The upper circuit filter on the NSE was ₹85.20 per share while the lower circuit price on the NSE was ₹56.80 per share. In comparison, the high price of the day at ₹74.80 per share was much below the upper circuit price. Even the low price of the day at ₹68.55 per share was much above the lower circuit limits for the day.

Price volume story on the NSE

The table below captures the opening price discovery in the pre-open period on the NSE.

Data Source: NSE

Let us look at how the stock traversed on the National Stock Exchange (NSE) on 10th November 2023. On Day-1 of listing, ESAF Small Finance Bank Ltd touched a high of ₹74.80 per share on the NSE and a low of ₹68.55 per share. The premium to the IPO price sustained through but the premium to the listing price could not really be sustained. While the low price of the day was just below the IPO closing price, the opening price of ESAF Small Finance Bank Ltd was approximately the mid-point of the day. Mainboard IPOs do not have an upper circuit of 5%, unlike SME IPOs since they trade in the normal equity segment and not in the trade to trade segment. However, on listing day, this IPO was subjected to the standard 20% upper and 20% lower circuit limit.

The High Price of the day at ₹74.80 per share was well below the upper circuit price of ₹85.20 per share. Similarly, the Low Price of the day at ₹68.55 per share was well above the lower circuit price of ₹56.80 per share. On Day-1 of listing, the ESAF Small Finance Bank Ltd stock traded a total of 689.74 lakh shares on NSE amounting to value of ₹493.51 crore during the day.  The order book during the day showed a lot of back and forth with the bias clearly in favour of the sellers in the second half, with serious selling emerging towards the end. The stock closed the day with pending unfulfilled sell orders of 35,037 shares on the NSE, showing pressure likely to spill over the next day too.

Price volume story on the BSE

Let us now turn towards the stock price performance of ESAF Small Finance Bank Ltd on the Bombay Stock Exchange (BSE) on 10th November 2023. On Day-1 of listing, ESAF Small Finance Bank Ltd touched a high of ₹74.70 per share on the BSE and a low of ₹68.50 per share. The premium to the IPO price sustained through but the premium to the listing price could not really be sustained. While the low price of the day was just below the IPO closing price, the opening price of ESAF Small Finance Bank Ltd was approximately the mid-point of the day. Mainboard IPOs do not have an upper circuit of 5%, unlike SME IPOs since they trade in the normal equity segment and not in the trade to trade segment. However, on listing day, this IPO was subjected to the standard 20% upper and 20% lower circuit limit.

The High Price of the day at ₹74.70 per share was well below the upper circuit price of ₹86.27 per share. Similarly, the Low Price of the day at ₹68.50 per share was well above the lower circuit price of ₹57.53 per share. On Day-1 of listing, the ESAF Small Finance Bank Ltd stock traded a total of 49.42 lakh shares on NSE amounting to value of ₹35.41 crore during the day.  The order book during the day showed a lot of back and forth with the bias clearly in favour of the sellers in the second half, with serious selling emerging towards the end. The stock closed the day with pending unfulfilled sell orders on the BSE, showing pressure likely to spill over the next day too.

Market capitalization, free float, and delivery volumes

While the volumes on the BSE were not as much as on the NSE, the trend was once again the same. The order book through the day showed a lot of pressure and that almost sustained till the close of trading session. The sharp spike in the Nifty and the Sensex helped get a good listing, but did not help to sustain these gains. On the NSE, out of the total 689.73 lakh shares traded during the first day of trading, the deliverable quantity represented 339.98 lakh shares or a deliverable percentage of 49.29% on the NSE, which is lower than the routine listing day median. That shows a lot of speculative action in the counter. Even on the BSE, out of the total 49.42 lakh shares of quantity traded, the deliverable quantity at a gross across client level was 25.66 lakh shares representing total deliverable percentage of 51.91%, which is at par with the delivery ratio on the NSE. Unlike the SME segment stocks, which are on T2T on the day of listing, the mainboard IPOs permit intraday trading even on the day of listing.

At the close of Day-1 of listing, ESAF Small Finance Bank Ltd had a market capitalization of ₹3,554.55 crore with free-float market cap of ₹391.00 crore. ESAF Small Finance Bank Ltd has issued capital of 5,147.80 lakh shares with a par value of ₹10 per share.