Courtesy: https://www.chittorgarh.com/
Review By Dilip Davda on October 21, 2025
- The company is engaged in financial services as a scheduled commercial bank.
• Its net margins are eroded in the recent financials for FY25 and posted a loss for Q1 of FY26, that raises concern.
• It is operating in a highly competitive and fragmented segment.
• Based on its recent financial data, the RI appears fully priced even with a discount of around 23%.
• Well-informed/cash surplus investors may park moderate funds for long term.
ABOUT COMPANY:
Utkarsh Small Finance Bank Ltd. (USFBL) is a scheduled commercial bank licensed by the Reserve Bank of India as a Small Finance Bank on November 25, 2016. The Bank commenced operations on January 23, 2017. It provides a broad suite of financial products including microfinance loans under the Joint Liability Group (JLG) model, MSME loans, housing loans, personal loans, commercial vehicle loans, construction equipment loans, and wholesale lending. Utkarsh SFBL also offers digital banking solutions such as Internet banking, Mobile banking, WhatsApp banking, Unified Payment Interface (UPI), Aadhar Enabled Payment Systems (AePS), Interoperable Cardless Cash Withdrawal, Digital Deposits, Bharat Connect, ASBA (Application Supported by Blocked Amount), Digi onboarding, and online account opening, along with access to ATMs and micro-ATMs to support customer convenience.
As of June 30, 2025, it had 0.51 crores active customers, which were served by 1,099 branches (including 768 Micro Banking and Lending Branches) across 23 states and four union territories in India, with the five states of Uttar Pradesh, Bihar, Maharashtra, NCT of Delhi and Haryana together accounting for Rs. 14,815.50 crore or 75.34% of Gross Loan Portfolio, as of the same date. It had a total 19871 employees on its payroll as of June 30, 2025.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 677913784 equity shares of Re. 10 each at a fixed price of Rs. 14 per share to mobilize Rs. 949.08 cr. The RI opens for subscription on October 24, 2025, and will close on November 03, 2025. The company is offering RI in the ratio of 8 for 13 to its eligible stakeholders as of the record date of October 14, 2025. The company is asking for full money on application for the number of shares applied. Post allotment, RI shares will be listed on BSE and NSE. The company is spending Rs. 14.17 cr. for this RI process, and from the net proceeds, it will utilize Rs. 934.91 cr. for augmenting its tier-1 capital base.
The RI is self-managed by the company itself, and KFin Technologies Ltd. is the registrar to the issue.
Post-RI, company’s current paid-up equity capital of Rs. 1101.61 cr. will stand enhanced to Rs. 1779.52 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 2491.33 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted total income / net profit, – (loss), of Rs. 3578.76 cr. / Rs. 497.63 cr. (FY24), Rs. 4364.76 cr. / Rs. 23.70 cr. (FY25). It posted a loss of Rs. 239.48 cr. on a total income of Rs. 1018.65 cr. for Q1 o fFY26 ended on June 30, 2025, against a net profit of Rs. 137.40 cr. on a total income of Rs. 1070.57 cr. for correspo9nding previous period. It has marked erosion in its net profits for the reported periods and losses for Q1 of FY26 raise major concern.
DIVIDEND POLICY:
The company has paid a dividend of 5% for FY24 and then skipped following lower earnings. It has a dividend policy based on its financial earnings and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 543942 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 23.19 on October 13, 2025, and opened on an ex-right basis at Rs. 19.80 on October 14, 2025. Since then, it has marked a high/low of Rs. 19.80 / Rs. 17.60. The scrip last closed at Rs. 18.20 as of October 20, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 37.01 / Rs. 16.43.
The promoters’ holding has been constant at 68.92% for the last three quarters ended with September30, 2025. RI is at a discount of around 23.08% based on its last traded price of Rs. 18.20 as of October 20, 2025. The counter is well maintained above the RI price to tempt investors.
Conclusion / Investment Strategy
USFBL is engaged in financial services as a scheduled commercial bank. Its net margins are eroded in the recent financials for FY25 and posted a loss for Q1 of FY26, that raises concern. It is operating in a highly competitive and fragmented segment. Based on its recent financial data, the RI appears fully priced even with a discount of around 23%. Well-informed/cash surplus investors may park moderate funds for long term.
Review By Dilip Davda on October 21, 2025
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detailed fundamental and financial analysis of companies coming up with IPOs helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
Courtesy: https://www.chittorgarh.com/
