Mumbai: The debut of the Fino Payment Bank makes a less enthusiastic debut, on the stock markets on Friday. The stock got listed at ₹544.35 apiece, a 5.65% discount over the issue price of ₹577 per share. The stocks further got listed at RS 548, on BSE. Even the Rs 1200.29 crore and the (IPO), was also subscribed for 2.03 times. The beginning and early stake sale, of the Fino payment Bank, had their subscription open between 29th October to 2nd November, there was no such activity recorded in the grey market. Furthermore, the issue comprised a new issue by the payments bank, and with that, it was offered for a scale by the existing shareholders.
And moreover, after this issue Vikas Jain, analyst, Reliance Securities, had said the IPO was valued at 31.9 times FY21 book value, which looks to be stretched. He believes current valuations do not leave much on the table for investors in the medium-term perspective. The bank generates over 95% of its income through fees and commissions, and future growth is primarily dependent on incremental wallet share digital payment opportunities in the country.
Given, digital payments are expected to cross ₹3,500 trillion in FY25, recording a sharp 25-27% CAGR over FY21-FY25E, the bank is is poised to see the healthy business opportunity in subsequent years in the backdrop of strong digital platform and resources built in the last couple of years," said Jain.
The Fino payment bank is a specialized bank, which provides a service in a cost-effective way. According to Jyoti Roy, analyst, Angel One, at the higher end of the price band, the stock would be trading at price to earnings (PE) of 220 times FY2021 fully diluted earnings per share (EPS) of ₹2.6 which is expensive. “Despite strong growth prospects, we believe that valuations do not justify the premium.”
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