IPO update: Ujjivan Financial Services issue progresses, sees 75% subscription on Day 2

NEW DEHI: The initial public offering ( IPO) of Ujjivan Financial Services witnessed continued buying on Day 2, and the issue received bids for 75 per cent of the total issue size at close on Friday.

Data available with the stock exchanges showed the IPO has received bids for 2.23 crore shares against the total issue size of 2.96 crore shares.


On NSE, the quota for retail individual investors (RIIs) was subscribed 48 per cent of the quota limit. The non-institutional investor (NII) quota saw bids for 3.44 lakh shares, which were 5 per cent of the total quota limit of 63.40 lakh shares. Qualified institutional buyers (QIB) were yet to bid for the issue on the exchange.

On BSE, the retail quota was subscribed by 54.98 per cent and NII quota by 27.22 per cent. QIBs bid for 61.98 per cent of the quota limit.

A quota of up to 35 per cent of the Rs 880 crore issue (at the upper end of the price band) is reserved for retail investors.

Many brokerages have given a ‘subscribe’ rating on the issue, saying the IPO valuation looks reasonable and the company has potential to deliver strong growth and return on assets, even after its conversion into a small finance bank.

Mehta Equities believes Ujjivan is well placed to tap the opportunities as it has a sound management team with extensive experience in the banking and financial services space.

“Valuations, per se, are comforting us compared with other listed players,” it said.

Qualified institutional buyers (QIBs) will be allowed to bid for not more than 50 per cent of the issue size. High networth individuals can bid for up to 15 per cent of the issue size. The public offering will close on May 2.

Antique Stock Broking in a note said at 1.6 times post-money book, the IPO valuation is reasonable, especially considering the fact that it can deliver strong growth and RoAs in excess of 2 per cent, even after its conversion into a small bank.

"At the upper end of the price band at Rs 210, UFSL will trade at 1.6 times the projected book value of nearly Rs 130 (post-issue) which we believe is fairly priced. We recommend investors to subscribe to the issue," said Prabhudas Lilladher in a note.

Ashika Stock Broking said the valuations of the IPO look attractive compared with listed players such as Equitas Holdings (2.44 times), SKS Microfinance (6.2 times 9MFY16) and Cholamandalam Investment and Finance (3.17 times 9MFY16).