Capital-small bank share price plummets; time to sell or hold?

February 14, 2024
1 min read

TLDR: Capital Small Finance Bank had a weak market debut on Wednesday, February 14th, with its share price falling below the IPO price. The stock opened at ₹430.25 on the NSE, indicating an 8.07 percent discount from the IPO price of ₹468. On the BSE, the stock debuted at ₹435, down 7 percent from its issue price. Experts advise staying away from the stock following its weak listing.

Capital Small Finance Bank’s share price hit an intra-day low of ₹421.10, down 10 percent from the IPO price, and an intra-day high of ₹462.95, which is 1 percent below the company’s issue price. The weak listing raises concerns about investor confidence in the bank’s future prospects.

Analysts had originally expressed optimism about the IPO, citing the company’s strong credit assessment procedures and effective risk management practices. However, the weak listing suggests potential investor concerns about the bank’s valuation, future growth prospects, or the overall small finance banking sector. The small finance banking sector is highly competitive and demands continuous performance improvements and strategic innovation.

Capital Small Finance Bank, established in 2016 as India’s first small finance bank, operates with a focus on offering a diverse range of banking products. The IPO, worth ₹523.07 crore, was open for subscription from February 7 to February 9 and was subscribed 4.17 times.

The IPO consisted of a fresh issue of 96 lakh shares and an offer for sale. The bank plans to utilize the net proceeds from the fresh issue to augment the Tier-I capital base and meet future capital requirements. It also plans to use the proceeds to cover

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