Utkarsh Small Finance Bank shares gain over 90% on Day 1. Should you sell?

economictimes.indiatimes.com:

Utkarsh Small Finance Bank were locked in the 20% upper circuit after listing at a stellar premium of 60% on the exchanges. The stock has gained over 90% on Day 1 at Rs 47.94, as compared to an issue price of Rs 25. The strong listing was on the expected lines after a tremendous response to the IPO, which was subscribed nearly 102 times.

Analysts advise investors to book profits, while aggressive investors can choose to buy during dips. «The company has a strong track record of growth, and its financial performance has been improving in recent years. Utkarsh SFB is well-positioned to benefit from growth of the SFB sector, as it has a strong focus on underserved segments of the population,» said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

The robust response from investors is mainly due to comfortable pricing and strong management focus towards microfinance business in the north eastern belt of India. «We recommend investors to book profits on the listing day, while risk takers can continue to hold for long term as we see abundance of growth opportunities in microfinance, where Utkarsh enjoys the market share,» said Prashanth Tapse of Mehta Equities. Analysts believe the company would continue to deliver steady growth in coming years with a healthy liquidity profile and cost- efficient risk management leading to improved asset quality.

The lender will utilise the proceeds to augment the Tier 1 capital base and meet future capital requirements. Incorporated in 2016, Utkarsh commenced operations in 2017, and its product suite includes a range of deposit products, including saving accounts, salary accounts, current accounts, recurring and fixed deposits, and locker facilities. While the top-line remains