IPO Analysis - Capital Small Finance Bank

What Capital SFB Limited do?

Capital Small Finance Bank, first non-NBFC microfinance organization to get SFB license was Capital SFB in 2015. business has branch-based operating strategy & is well-established in both rural & semi-urban locations.
Middle-class consumer groups that earn between ₹0.4 & ₹5 million annually are focus of Capital Small Finance Bank. Through combination of product offerings, customer service, physical branches, & internet platforms, they hope to become these clients' primary banker.

Capital Small Finance Bank Limited Financial Analysis

Analysis

Assets  

1. Company's total assets have shown consistent increase over reporting periods, reflecting growth in its resource base & potentially expanded business operations.

2. This steady growth indicates positive momentum & may suggest effective capital allocation & investment strategies.

3. Investors may view this trend favourably as it signifies company's ability to scale up its operations & enhance its market position.

Revenue

1. Revenue has fluctuated over reporting periods, with notable increase in FY23 followed by decrease in latest period.  

2. While increase in FY23 demonstrates revenue growth & business expansion, subsequent decline may raise concerns about revenue sustainability.  

3. Investors should investigate factors contributing to revenue fluctuations & assess company's ability to maintain or improve revenue levels in future.

Profit After Tax (PAT)  

1. PAT has geneally shown upward trend, indicating improving profitability over reporting periods.

2. Significant increase in FY23 reflects enhanced operational efficiency & profitability.

3. Investors may interpret this trend positively as it demonstrates company's ability to generate sustainable profits & create value for shareholders.

Net Worth

1. Net worth has increased consistently, indicating growth in shareholders' equity & overall financial strength.  

2. Growth suggests that company has been able to retain earnings & accumulate wealth over time.    

3. Investors may view rising net worth positively as it enhances company's ability to withstand financial challenges & pursue growth opportunities.

Reserves & Surplus

1. Reserves & surplus have followed similar pattern to net worth, showing steady growth over reporting periods.

2. This increase indicates that company has been able to set aside profits for future investments or to buffer against risks.  

3. Investors may see growing reserves & surplus as positive sign of financial stability & prudent financial management.

Total Borrowing

1. Total borrowing has fluctuated over reporting periods, with peaks & troughs in FY22 & FY23.    

2. Decrease in FY22 followed by increase in FY23 suggests varying financing needs or changes in company's borrowing strategy.

3. Investors should assess company's debt management practices & monitor trend in total borrowing to evaluate its impact on financial health & risk exposure.

Capital Small Finance bank Peer Comparison

Analysis

EPS: Capital Small Finance Bank's EPS of 27 (both basic & diluted) is above average EPS of 11.10, indicating strong profitability compared to its peers.

NAV per Share: Capital Small Finance Bank's NAV per share of ₹ 258 is significantly higher than average NAV of ₹ 102.40, suggesting strong asset base relative to its competitors.

P/E Ratio: Capital Small Finance Bank’s P/E ratio of 15, is trading at lower valuation compared to average P/E ratio of 20.61, indicating potentially attractive valuation relative to its earnings.

RoNW: Capital Small Finance Bank's RoNW of 15% is slightly below average RoNW of 13.94%, suggesting relatively efficient utilization of its net worth compared to its peers.

P/BV Ratio: Capital Small Finance Bank's P/BV ratio of 1.82 is below average P/BV ratio of 2.22, indicating that stock is trading at lower premium relative to its book value compared to industry average.

Conclusion

Capital Small Finance Bank demonstrates strong profitability (high EPS), robust asset quality (high NAV per share), & attractive valuation (lower P/E ratio & P/BV ratio) compared to its peers. However, its RoNW is slightly below average, suggesting room for improvement in terms of generating returns on its net worth. Overall, it appears to be well-positioned within small finance banking segment, particularly in terms of profitability & asset quality.