Capital Small Finance Bank makes a disappointing debut. What should investors do now?
Capital Small Finance Bank made a disappointing debut on the bourses on Wednesday, mainly on account of muted investor sentiments and current sluggishness in the market.
The stock has listed at an 8% discount as against an issue price of Rs 468.
Analysts said the negative performance falls significantly short of pre-listing expectations and raises questions about investor confidence in the bank's prospects.
The small finance banking sector is highly competitive, demanding continuous performance improvements and strategic innovation.
«The listing highlights potential investor concerns regarding the company's valuation, future growth prospects, or the overall small finance banking sector. The poor listing necessitates a cautious approach towards CSFB. The view is to avoid such stocks and prefer investing in some quality stocks from the sector,» said Shivani Nyati, head of wealth at Swastika Investmart.
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Capital Small Finance Bank focuses primarily on the middle-income customer segments i.e., customers with an average annual income of Rs 4-5 lakh in semi-urban and rural areas. It has 42% of the branches in rural areas, 34% branches in semi-urban areas and 24% in urban areas, as of September 2023.
The SFB has a diversified portfolio with sizable books in multiple asset classes with a proportion of secured lending of 99.85% as of September 2023.
Capital SFB's retail and CASA deposits stood at 93.59%, and 37.76%, respectively,
