IPO Analysis: Capital Small Finance Bank Ltd.

IPO analysis of Capital Small Finance Bank Ltd.

Capital Small Finance Bank Ltd. commenced operations as India’s first small finance bank in 2016 pursuant to RBI’s approval dated March 4, 2016. They offer a range of banking products on the asset and liability side, in all the states they operate in, i.e., Punjab, Haryana, Delhi, Rajasthan, Himachal Pradesh and Union Territory of Chandigarh. Their asset products primarily include agriculture loans, MSME and trading loans (working capital, machinery loans etc.) and mortgages (housing loans and loans against property). They have an experience of over two decades in the banking industry, having been incorporated in 1999. They are regulated by RBI and are one out of the two non-NBFC microfinance entities to receive the SFB license in 2015. Their core strategy is to strengthen their retail focused banking franchise by enabling access to affordable credit in the states they operate in their well-defined niche catering to middle-income group segment with special emphasis on rural and semi-urban areas. As on date, they do not have any subsidiaries. They focus primarily on the middle-income customer segments i.e., customers with an average annual income of ₹ 0.4 million to ₹ 5 million in semi-urban and rural areas with 41.62% of their branches in rural areas, 34.68% branches in semi-urban areas and 23.70% of their branches in urban areas as on September 30, 2023.Since they focus primarily on the middle-income customer segments, they believe that their full suite of products and services on the asset and liability side will provide them an opportunity to serve more customers in the middle-income segment that have limited or no access to formal banking channels, spread across rural and semi-urban areas.

Their background as a local area bank helped them in understanding the needs of their target customers but restricted their geographical outreach. Post conversion into a small finance bank, they have been able to expand their operations into new and contiguous geographies which has enabled them to widen their customer base and resulted in improved operational and business metrics. The expansion of their business has been a major factor in the growth of their advances and deposits. Over the years, they have expanded their operations strategically in the north Indian states of Punjab, Haryana, Rajasthan, Delhi, Himachal Pradesh and Union Territory, Chandigarh. As of September 30, 2023, they were present in five States and one Union Territory with 173 branches and 175 ATMs with 76.30% of their branches located in rural and semi-urban areas covering 24 districts and 75.75% of their total customers (both credit and deposit). They plan to continue to expand their business. The company commenced operations as India’s first small finance bank in 2016 pursuant to RBI’s approval dated March 4, 2016. They offer a range of banking products on the asset and liability side, in all the states they operate in, i.e., Punjab, Haryana, Delhi, Rajasthan, Himachal Pradesh and Union Territory of Chandigarh. Their asset products primarily include agriculture loans, MSME and trading loans (working capital, machinery loans etc.) and mortgages (housing loans and loans against property). The company has demonstrated an increasing trend in profit after tax, Return on Assets (RoA), and Return on Equity (RoE) for both Fiscals 2022 and Fiscals 2023, indicating consistent performance. Their retail deposits as a percentage of total deposits, and CASA deposits stood at 97.90% and 41.88% as on March 31, 2023, and 93.59% and 37.76% as on September 30, 2023, respectively. Furthermore, their percentage of gross NPAs to total advances has been consistently low, with figures of 2.73% as on September 30, 2023, and 2.77%, 2.50%, and 2.08% for the Fiscals ended March 31, 2023, 2022, and 2021, respectively. They aim to be the primary banker to their customers through a mix of suite of product offerings, customer service orientation, deeply entrenched physical branch network, and evolving digital channels of service delivery.

Additionally, they generate fee income from various products and services such as forex and money transfer, outward remittances, safe-deposit lockers, distribution of life insurance and general insurance products, 3-in-1 demat and trading account, and other ancillary services. As of September 30, 2023, and March 31, 2023, respectively, 99.85% and 99.82% of their loan book was secured, with 84.26% and 85.16% of loans secured by immovable properties. They have strategically focused on building a granular loan book, with loans with a ticket size of up to ₹ 2.5 million increasing from 62.88% of their total loan book in Fiscal 2021 to 67.80% in Fiscal 2023 and standing at 67.44% as on September 30, 2023. Their cost of funds was 5.11% and 5.68% for Fiscal 2023 and for the period ended September 30, 2023, respectively. They offer competitive interest rates, with a retail term deposit rate of up to only 7.60%, compared to higher rates offered by others in the market. They also provide a savings bank deposit rate of 3.50%, irrespective of the amount of saving deposit, which differs from other banks having different rates for various buckets. Furthermore, they have the lowest cost of deposit amongst comparable small finance banks, with figures of 4.94% as of March 31, 2023, followed by AU SFB (5.48%) and Ujjivan SFB (6.00%). The company operates on a branch-based model with a significant presence in semi-urban and rural areas, headquartered in Jalandhar, Punjab. They have strategically expanded their operations in north Indian states including Punjab, Haryana, Rajasthan, Delhi, Himachal Pradesh, and Union Territory of Chandigarh. As of September 30, 2023, they were present in five states and one union territory with 173 branches and 175 ATMs, with 76.30% of their branches located in rural and semi-urban areas, serving a niche middle-income group segment with a focus on these regions. They maintain a quality asset portfolio as evidenced by streamlined underwriting processes, efficient credit assessment, collections, and risk management capabilities. As of September 30, 2023, their gross NPAs were ₹ 1,604.21 million, accounting for 2.73% of their advances, while net NPAs were ₹ 786.69 million, accounting for 1.36% of their advances. They also maintain adequate capital, with a CRAR of 20.72%, exceeding the statutory minimum of 15% required by the RBI, and a healthy balance sheet with Tier I and Tier II capital ratios of 15.26% and 5.46%, respectively. They leverage technological capabilities to increase digital interactions and transactions with customers.

Their digital transition has facilitated wider outreach, with ₹ 10.39 million digital transactions during Fiscal 2023, and the share of digital transactions in non-cash transactions increasing from 54.48% in Fiscal 2021 to 81.32% in Fiscal 2023. The company's Promoter, Mr. Sarvjit Singh Samra, brings over three decades of experience in the banking and financial services sector. Their Board is supported by an experienced and qualified management team with diverse experience across the banking and financial services sector. Key managerial personnel and members of the senior management have been associated with the company since its days as a local area bank. Additionally, they are backed by institutional investors and financial institutions including SIDBI, PI Ventures LLP, OIJIF II, Amicus, ICICI Prudential, HDFC Life, and Max Life Insurance Company Limited.

Industry Research:

In 2013, the RBI constituted a committee to further their goal of financial inclusion. The committee recommended differential licencing in the form of payment banks which was chaired by Dr Nachiket Mor and small finance banks which was chaired by Mrs. Usha Thorat. On November 27, 2014, the RBI released guidelines for a new class of banking entity called small finance banks that would cater to the diverse needs of low-income groups. On September 16, 2015, the RBI awarded small finance bank licences to 10 players on account of the government’s focus on financial inclusion and inclusive banking. 8 out of the 10 entities given in-principal approval were microfinance institutions. Players like AU SFB and Capital SFB are the only two that are not NBFC-MFIs to receive an SFB license. They were given approval on account of lending in contiguous districts, mobilizing rural savings and making them available for local investments and were aimed at furthering financial inclusion. These were given SFB licenses on account of their lending primary in the rural and semi-urban regions as well as furthering financial inclusion by means of bringing high number of people into the banking fold . With small finance banks and payments bank increasing their reach and expanding into ru ral areas and increasing financial awareness, faster growth in rural areas can be expected in the future given the huge untapped potential. Between the end of fiscal 2015 and the end of fiscal 2021, the number of credit accounts in semi-urban areas grew where share in branches of PSBs has fallen as against SFBs increasing their share from 1% FY18 to 3% in FY21. These entities can focus on both the asset and liability side where currently the PSBs dominate. This provides considerable opportunity to SFBs to gain further share through their specialised offerings and expanding their services to the underbanked. Similarly, in terms of credit and deposits, the share of SFBs across various regions is in the range of 0 -2% and hence significant improvement in their share is possible by providing targeted services by being attached with the population at ground level. Given the strong hold and experience of these entities in dealing with customers across these regions, the share of SFBs will go up as against the public and private sector banks and thus presents a large opportunity for SFBs to penetrate these regions deeply at the expense of others. For non-NBFC entities like a local area bank or an urban co-operative bank, the scheduled bank license to run as an SFB acts as a booster in terms of enhancing their reach in the geographies where they already are present to further bank the unbanked and provide extended services beyond their initial scope of activities. With their localised past experience, SFBs, especially the ones which were existing as local area banks have the ability to manage local stakeholders and maintain operational efficiency more effectively .Small finance banks’ AUM clocked 26% CAGR during fiscals 2016-2021. CRISIL Research expects the sector’s loan portfolio to see a strong ~22% CAGR in the near term as most of the SFBs have completed the transition phase and likely to get ben efit from the operating leverage. In terms of branches, the share of SFBs in total branches is lowest in the Eastern and the Central region followed by the Northern region. These areas are still largely dominated by public sector banks. This provides considerable opportunity to SFBs to gain further share through their specialised offerings and expanding their services to the underbanked.

Capital SFB already had its presence across the retail liability and asset side on account of operating as a local area bank before converting to a small finance bank. As a result of the same, its retail franchise and reach had already been established across the current and savings deposits as well as retail term deposits placing it in good stead as against oth er small finance banks that are new to the product and have to acquire a lot of customers through various channels to establish a strong base. In terms of the retail lending operations as well, Capital SFB is well diversified with product knowledge and exp erience across various asset classes. In comparison, the majority of other SFBs primarily focused on MFI lending, could find it more difficu lt to penetrate into other products as the knowledge has to be built from scratch and the entire operational cost ha s to be borne to be set up from base across asset classes. Thus, for Capital SFB the products, systems and processes are already in place sinc e it had been operating as a local area bank and is in a good position to scale up its operations across different geographies.

Investment Rationale:

Retail focused liability franchise with a high share of CASA:

They have created a retail-centric deposit franchise with a high share of CASA deposits, with the CASA ratio increasing from 40.08% in Fiscal 2021 to 41.88% in Fiscal 2023. They believe that their experience of operating as a local area bank for over 16 years provides them a competitive edge with respect to their understanding of growing their deposit base. They believe that their holistic suite of banking products, deeply relationship- based banking approach, entrenched branch network, single window service, customer-friendly practices, and brand equity have aided their retail-centric deposit profile. With their comprehensive suite of products including savings bank deposits, current deposits, term deposits, NRE and NRO deposits, and tax saver deposits, they are able to cater to the diverse needs of their customers across their areas of operations. They believe that their brand equity associated with their name in their areas of operation has also aided the growth of their liability franchise, coupled with their marketing efforts which have improved visibility of their brand. They focus on providing all banking products and services to the customers with an emphasis on rural and semi-urban areas, which allows them to penetrate deeper into the markets they cater to. Further, they are the only SFB empanelled with the Food Civil Supplies and Consumer Affairs Department, Government of Punjab, to act as nodal banker for processing the payment of procurement proceeds of food grains to the beneficiaries. They believe that retail deposits have significant advantages including stability in deposits, greater customer retention, enhanced cross-selling opportunities, in addition to supporting the low cost of funds. Their deposit rollover ratio has been consistently around 90% for term deposits, which provides stability to their liquidity profile and demonstrates the continued trust of their customers in them.

Secured and diversified advances portfolio:

The company has consciously focused on building a secured and granular loan book over the years with a focus on income generation. As of March 31, 2023, and September 30, 2023, 99.82% and 99.85% of their loan book, amounting to ₹ 54,975.90 million and ₹ 58,571.93 million, was secured, with 85.16% and 84.26% respectively of the loans being secured with immovable properties. They have a well-diversified portfolio across products (agricultural, MSME and trading, mortgage lending, and other products) which helps them mitigate risk and optimize resources. They focus on the middle-income group segment and aim to be the primary banker of their customers. With this endeavor, they offer a full suite of products and services on the asset and liability side to address customer needs. The average ticket size of their agriculture, MSME & trading, and mortgage lending products was ₹ 1.23 million, ₹ 1.82 million, and ₹ 1.16 million as of March 31, 2023, and the same stood at ₹1.24 million, ₹ 1.81 million, and ₹ 1.15 million as of September 30, 2023, respectively. Prior to 2016, the company operated as a local area bank and was one of the two non-microfinance institutions granted the SFB license by RBI. Because of their background as a local area bank, they already existed in diversified segments which resulted in them having lower systemic risks compared to the overall industry with a high MFI base. Furthermore, although the priority sector lending (“PSL”) targets are prescribed by RBI, they have taken it as an added opportunity to contribute to the economic development in their areas of operation and serve the middle-income customer segments by fulfilling their credit requirements while also achieving the PSL targets. Their PSL advance increased at a CAGR of 17.16% from ₹ 25,792.47 million as of March 31, 2021, to ₹ 35,403.26 million as of March 31, 2023, and to ₹ 36,844.32 million as of September 30, 2023.

Streamlined credit assessment processes and risk management practices:

Their credit assessment processes, and risk management practices enable them to maintain good asset quality and low delinquencies. Their strategy of secured lending, primarily for productive purposes and conservative loan-to-value ratio contributes towards lower delinquencies and credit losses. Their positioning as the primary banker to most of their customers enables them to have a comprehensive view of and control over their cash flows, contributing towards effective credit assessment. Their credit assessment involves multiple levels of independent review of information, following the principle of four eyes which involves a multi-level review of the credit exposures along with a well-defined matrix for credit assessment dependent on the risk profile of the borrower, including mandatory checks of credit bureau verification, review of defaulters list, and check on frauds. They have a credit sanctioning committee overseeing exposures of an amount involving ₹ 12.50 million or above, and a dedicated team to monitor the exposures granted by them. Following the principle of secured lending has resulted in maintaining high asset quality. Their advances stood at ₹ 55,072.67 million and ₹ 58,659.37 million with 99.82% and 99.85% of it being secured loans as of March 31, 2023, and as of September 30, 2023, with an average ticket size of ₹ 1.34 million and ₹ 1.37 million respectively. They have maintained a consistent asset quality in the range of 2%-3% from Fiscal 2021 to the six months ended September 30, 2023, compared to other peers in the SFB space. Their dedicated customer relationship team maintains healthy engagement with customers on an ongoing basis resulting in effective collection recoveries and consequently better asset quality. These measures have resulted in maintaining their asset quality. The company maintains healthy loan loss provisions (provisions held for NPAs and standard asset provision as % to gross NPAs) of 70.01% as of March 31, 2023, and 68.64% as of September 30, 2023. With over two decades of banking experience, including 16 years as a local area bank, they have witnessed various cycles along the way. Their portfolio composition, asset creation, credit assessment, and efficient recovery mechanism depict risk management based on credit assessment, secured loan book, continued focus on cash flow generation, and collection efficiencies, which contribute to creating a favorable asset quality.

Following Customer centric approach and understanding of target customers:

They have gained an understanding of their market and customer base over the years, enabling them to meet the financial requirements of their existing and potential customers. They believe customers prefer a single source for multiple financial services, and accordingly offer a range of credit and non-credit products and services to address a variety of financing requirements through their branch network. These practices have helped them achieve their endeavor of having a primary banking relationship. Their main focus is on providing products and services catering to the middle-income group segment with special emphasis on rural and semi- urban areas in their areas of operations. They serve as a one-stop financial hub where they operate. As of March 31, 2023, and September 30, 2023, they had 7,01,071 and 7,25,037 customers respectively (both credit and deposit). Further, as of September 30, 2023, they had 173 branches and 175 ATMs with 76.30% of their branches located in rural and semi-urban areas. As the majority of their customers are individuals from middle-income group segments, they have designed their products to be simple to understand, which they believe contributes to their popularity among customers. They believe in customer engagement at every stage through their relationship managers, personal bankers, and retail bankers deployed at their branches. They strategically follow a branch network-driven business acquisition strategy which helps them identify customer needs effectively and respond with solutions. They target customers across sectors with special attention to rural and semi-urban centers because they believe in running a socially responsible and sustainable business, and borrowers in these regions tend to have lower credit penetration. In these markets, there is less competition, lower risk of customer migration leading to longer, more loyal customer relationships, better credit behaviors, and lower delinquency rates. They also encourage local hiring to stay connected to their customers through personal and digital means and provide them with seamless banking services. They believe that their track record of originating and servicing these loans, together with their extensive network of branches catering to these customers, positions them favorably to compete in these segments and continue to grow their business.

Consistent track record of growth with constantly improving operational and profitability metrics:

The company commenced its operations as a small finance bank with effect from April 24, 2016. Their background as a local area bank helped them understand the needs of their target customers but restricted their geographical outreach. Post conversion into an SFB, they have been able to expand their operations in newer and contiguous geographies, enabling them to widen their customer base and resulting in improved operational and business metrics. Since their conversion into an SFB, they have demonstrated consistent improvement in their financial metrics such as total advances growth, deposit growth, increasing C/D Ratio, improving cost-to-income ratio, and profitability. Their CASA deposits as of the six months ended September 30, 2023, and Fiscals ended March 31, 2023, 2022, and 2021 were ₹ 26,433.61 million, ₹ 27,478.96 million, ₹ 25,494.01 million, and ₹ 20,926.34 million, respectively. Their average credit-to-deposits ratio has also improved from 67.51% in Fiscal 2021 to 77.96% in Fiscal 2023 to 79.61% as of the six months ended September 30, 2023.

The company aims to continue growing their loan book organically with more focus on secured lending:

They plan to expand their reach by penetrating existing markets deeper, opening new branches in Punjab, and entering newer territories such as Haryana, Union Territory of Chandigarh, Rajasthan, NCR, and Himachal Pradesh. Their strategy is to develop a deeply entrenched geographical presence to service a larger market for credit and effectively grow their advances. They have successfully grown their loan book over the years, with advances as of September 30, 2023, and September 30, 2022, for agriculture, MSME and trading, and mortgages segments. They strive to maintain the growth momentum in their loan book with a continued focus on these segments. The company believes they are well-positioned to take advantage of the tailwinds and intend to continue growing their portfolio with a focus on secured lending, which they believe will provide them a competitive edge over their competitors. Since they focus primarily on the middle-income customer segments, they believe that their full suite of products and services on the asset and liability side will provide them an opportunity to serve more customers in the middle-income segment that have limited or no access to formal banking channels, spread across rural and semi-urban areas. They also plan to enter into business partnerships in states where they have a lower presence currently to gain an understanding of the new markets they intend to penetrate. Such partnerships are expected to help in mitigating associated risks and enable them to diversify their products and services as well as their geographical presence. Additionally, they intend to open targeted branches in urban/metro areas to grow their business in these areas. While expanding their network of branches, they will continue to evaluate various market and credit parameters using time series analysis on credit growth, delinquencies, customer growth, and publicly available metrics including household information, population, economic activities, and deposit data. They believe that their data-driven decision-making to open additional branches will offer those better returns and lower risk.

Strengthening its liability franchise:

Focusing on its granular retail-focused deposit base. Leveraging the strength of their brand, they have rapidly grown their deposit portfolio since commencing operations as a small finance bank. Since 2016, they have prioritized enhancing their retail deposits due to their lower cost compared to wholesale deposits and their tendency to stay deposited with the bank over a longer period. Their retail focus enables them to maintain high levels of CASA (Current Account and Savings Account) deposits compared to their peers. They are focused on deepening existing relationships to continue maintaining high levels of CASA. Their CASA deposits as of March 31, 2023, March 31, 2022, March 31, 2021, and September 30, 2023, were ₹ 27,478.96 million, ₹ 25,494.01 million, ₹ 20,926.34 million, and ₹ 26,433.61 million, respectively, representing CASA ratios of 41.88%, 42.16%, 40.08%, and 37.76%, respectively during these periods. As of March 31, 2023, and September 30, 2023, they had CASA ratios of 41.88% and 37.76% respectively, resulting in a low cost of funds of 5.11% and 5.68% respectively. Their cost of funds stood at 5.68% and 5.11% for the six months ended September 30, 2023, and Fiscal ended March 31, 2023. They plan to continue increasing their CASA and retail deposits with a judicious mix of wholesale deposits in order to optimize their cost of funds.

Expanding Banking Operations:

The company holds a license to operate as a small finance bank in India and is also recognized as a scheduled bank, regulated by the Reserve Bank of India. This regulatory status enables them to provide banking services across all of India and cater to various customer segments. Committed to financial inclusion, especially in rural and semi-urban areas, they serve customers through a network of 173 branches spread across Punjab, Union Territory of Chandigarh, Haryana, Rajasthan, NCR, and Himachal Pradesh. Their current offerings include a variety of credit and deposit products and services, positioning them as a one-stop solution for their customers' financial needs. In addition to credit and deposits, they also provide a suite of products and services such as forex, non-trade retail remittances, safe-deposit lockers, distribution of financial products including insurance (both life and non-life), and other ancillary services. Leveraging their various distribution channels, they generate non-interest income. Their relationship-based approach with customers has been instrumental in achieving their goal of establishing primary banking relationships, contributing to their success in serving their customers' financial needs comprehensively.

Management Profile:

Madan Gopal Sharma is the Part-time Chairman and Independent Director of Bank. He holds a bachelors’ degree in science from Panjab University. He is also a qualified chartered accountant and company secretary, and is a member of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India. Further, he has completed postgraduate diploma in business and industrial management from Datamatics institute of Management. He has over four decades of experience in, among others, finance, taxation, corporate laws, commercial functions and project appraisals. He is also presently serving as the executive director (finance) and chief financial officer of The Sukhjit Starch and Chemicals Limited.

Sarvjit Singh Samra is the Managing Director and Chief Executive Officer of Bank. He holds a bachelor’s degree in arts and a master’s degree in business administration from Guru Nanak Dev University. He has over 35 years of experience in the banking and financial industry spread over various roles, including senior positions. He has been associated with our Bank since its inception and has been instrumental in the conversion of our Bank from a local area bank to an SFB. He has previously served as the managing director of various asset financing companies. He has also previously served as our part-time chairman for over three years and has been serving as our Managing Director and Chief Executive Officer since over 18 years.

Srinath Srinivasan is a Non-Executive Director of Bank and a nominee of Oman India Joint Investment Fund II on our Board. He holds a bachelor’s degree in engineering (electronics and communication) from the National Inst itute of Technology, Karnataka, Mangalore University and a master’s degree in business management from the Asian Institute of Management. Further, he has completed an executive education programme on leadership skills for top management from the Indian Sch ool of Business, the Blue Ocean Strategy Programme – India Edition from INSEAD, the executive program in luxury brands from the SDA Bocconi School of Management and the independent directors certification program conducted by Hunt Partners and Board Evalua tion. He has previously served as the country head for the private equity business of Rand Merchant Bank in India and has been associated with Reliance Capital Asset Management Limited. In 2011, he was appointed as the Chief Investment Officer of Oman India Joint Investment Fund Management Company Private Limited. He has been serving as the Chief Executive Officer of Oman India Joint Investment Fund Management Company Private Limited since 2012. He was also elected to the executive council of the Indian Venture Capital Association in 2015 and has served two consecutive terms thereon.

Mahesh Parasuraman is a Non-Executive Director of Bank and a nominee of Amicus Capital Private Equity LLP and Amicus Capital Partners India Fund I on our Board. He holds a bachelor’s degree in commerce from the Bangalore University and is an associate member of the Institute of Chartered Accountants of India. He is also a member of the Institute of Cost a nd Works Accountants of India. He is currently also a director of AAUM Investment Advisers Private Limited and a designated partner in Amicus India Capital Partners LLP and Amicus Capital Private Equity I LLP. He has over 21 years of experience and was previously associated with Carlyle India Advisors Private Limited (an affiliate of the Carlyle Group), Ernst & Young LLP and Arthur Andersen & Associates.

Rahul Priyadarshi is a Non-Executive Director of Bank and a nominee of SIDBI on our Board. He holds a bachelor’s degree in arts (honours) with a specialisation in economics from the University of Delhi and a master’s degree in arts with a specialisation in economics from the University of Kent at Canterbury. He also holds a master’s degree in business administration from Sikkim Manipal University. Further, he is an associa te of the Institute of Banking and Finance. He currently serves as the General Manager, Chandigarh Regional Office at SIDBI.

Dinesh Gupta is a Non-Executive Director of Bank. He holds a bachelor’s degree in commerce and a bachelor’s degree in law from Guru Nanak Dev University. He is also a fellow member of the Institute of Company Secretaries of India. He has also received the Lean Six Sigma Green Belt Certificate from Benchmark Six Sigma. He also currently serves as a director of DSB Law Group Private Limited and DSB Edutech Private Limited. He is a Practicing Company Secretary and currently Managing Partner of M/s Dinesh Gupta & Co., Company Secretaries. He has over 34 years of experience in, among others, finance, taxation, corporate laws, corporate restructuring, commercial laws, banking and business process management. He also practised as an Advocate with Punjab & Haryana High Court from 1988 to 1992. He previously remained as Director of Capital Local Area Bank Limited from 2007 to 2015. He also currently serves as a director of DSB Law Group Private Limited and DSB Edutech Private Limited

Navin Kumar Maini is an Independent Director of Bank. He holds a bachelors’ degree in law and a bachelors’ degree in science (honours) from the University of Delhi. Further, he holds a post-graduate diploma in international trade from the Indian Institute of Foreign Trade, a certificate of participation in the NIBM-Stanford Advanced Management Programme presented by the Stanford University Graduate School of Business and a post-graduate diploma in management from the Management Development Institute. He has also completed the executive course on Financial Institutions for Private Enterprise Development, conducted by Harvard Law School and the Interna tional institute for Advanced Studies. He is also a certified associate of the Indian Institute of Bankers. He has over four decades of experience in the banking industry. He has previously served as the deputy managing director of SIDBI and has also previously been associated with Industrial Development Bank of India and United Commercial Bank and has served as a director of various entities, including SIDBI Trustee Company Limited, SIDBI Venture Capital Limited, National Credit Guarantee Trustee Company Limited, India SME Asset Reconstruction Company Limited, Bhartiya Samruddhi Finance Limited and Acuite Ratings & Research Limited. He currently serves as a director on various entities including Ananya Finance for Inclusive Growth Private Limited, AYE Finan ce Private Limited and NSE Clearing Limited.

Gurpreet Singh Chug is an Independent Director of Bank. He holds a bachelor’s degree in arts and a bachelor’s degree in law from the Guru Nanak Dev University. He also holds the qualification of Licentiate from the Insurance Institute of India. He has previously served as an independent director of S.R. Impex Private Limited and has been associated with Global Financial Services as its President, M/s. Steel Products (India) as its Proprietor and presently serves as the Managing Director of Pioneer Assurance Consultants Limited.

Financials:

Balance Sheet

Profit & Loss

Cash Flow

Valuation & Opinion:

Capital Small Finance Bank is Retail focused liability franchise with a high share of CASA. It has a Secured and diversified advances portfolio. Their credit assessment processes, and risk management practices enable them to maintain good asset quality and low delinquencies. They have gained an understanding of their market and customer base over the years, enabling them to meet the financial requirements of their existing and potential customers. The company has demonstrated an increasing trend in profit after tax, Return on Assets (RoA), and Return on Equity (RoE) for both Fiscals 2022 and Fiscals 2023, indicating consistent performance. Their retail deposits as a percentage of total deposits, and CASA deposits stood at 97.90% and 41.88% as on March 31, 2023, and 93.59% and 37.76% as on September 30, 2023, respectively. Furthermore, their percentage of gross NPAs to total advances has been consistently low, with figures of 2.73% as on September 30, 2023, and 2.77%, 2.50%, and 2.08% for the Fiscals ended March 31, 2023, 2022, and 2021, respectively. At the current IPO price company looks fairly valued for long term perspective.

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