IPO Size: Rs. 570 cr 

• Fresh Issue Rs. 462 cr for growth capital
• Offer for sale (OFS) Rs.108 cr by PE investors Client Rosehill and Hero Ventures (7.9% combined holding to drop to 4.5%)

Price band: Rs. 393-414 per share  

• Rs.113 cr pre IPO placement undertaken at Rs. 414 per share on 19.1.24

M cap: Rs. 4,438 cr, implying 13% dilution

IPO Date: Wed 7^th Feb to Fri 9^th Feb 2024, Listing Wed 14^th Feb 2023

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

4^th Largest Small Finance Bank (SFB)

A micro finance institution (MFI) in its previous avatar, Jana SFB has gross advances of Rs. 21,347 cr, as of 30.9.23, split 22% in micro finance loans, 18% loan against property, 17% agri loans, 15% MSME loans and 14% affordable housing loans. Its loan book is geographically diversified, with top 3 states – Maharashtra, Karnataka and Tamil Nadu accounting for just 38% combined.

Peer Comparison

While 57% of Jana’s advances are secured, its net NPA is quite high at 0.9%, in relation to some of listed other SFB peers like Utkarsh and Ujjivan – both with 0.2% net NPA. Given higher mix of secured loan, net interest margin (NIM) at 7.8% is also lower than Utkarsh’s SFB’s 9.7% and Ujjivan’s 8.8%. Nevertheless, RoE of 19% and RoA of 1.6% are comparable to listed peers.  

Attractively Valued

Based on estimated book value of Rs. 313 per share, as of 31.3.24, shares are being offered at a PBV multiple of 1.3x, based on FY24E, which is lower than peers. ESAF SFB with Rs. 17,500 cr AUM, 1.2% net NPA and 11% NIM is trading at FY24E of PBV 1.6x while Equitas SFB with Rs. 33,000 cr AUM and 1.1% net NPA and 8.4% NIM is quoting at a PBV multiple of 2.0x. Peers Utkarsh and Ujjivan, both with better asset quality and NIMs are ruling at 2.2x, thus, leaving scope for expansion in PBV multiple of Jana, upon listing.

Shareholding Structure

This is company’s 2^nd attempt at IPO, and first filing was made in March 2021.

Promoter holding presently is just at 25% with balance stake held by 173 investors, including funds such as TPG, Amansa, Volrado, Tree Line and domestic UHNIs among others. These non-promoter investors would look to exit their respective stake, post expiry of 6 month lock-in, as some are invested since 2011. This may lead to a massive overhang on share price, as the holding is sizeable.