Fino Payments Bank IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Fino Payments Bank IPO– incorporated in 2007 and it offers a diverse range of financial products and services that are primarily digital and have a payments focus. The company is a fully-owned subsidiary of Fino Paytech. It is backed by investors like Blackstone, ICICI Group, Bharat Petroleum and International Finance Corporation (IFC).

Business — The company has a pan-India distribution network and its’ major products and services includes:
• Current accounts and Savings accounts (CASA),
• Issuance of debit card and related transactions,
• Facilitating domestic remittances,
• Open banking functionality (through their Application Programming Interface),
• Withdrawing and depositing cash (via micro-ATM or Aadhaar Enabled Payment System (AePS) and
• Cash Management Services (CMS).

The company’s merchants facilitate them in cross-selling their other financial products and services such as third-party gold loans, insurance, bill payments and recharges. Fino Payments also manages a large BC (Business Correspondents) network on behalf of other banks.

Also READ : NYKAA IPO : SUBSCRIBE OR NOT

Offer purpose —

300 cr of fresh equity and 900 cr of offer for sale of existing shares. Augmenting Bank’s Tier – 1 capital base to meet its future capital requirements.

Risks —

High competitive landscape

Payments banks cannot undertake lending activities restricting their growth, They can accept only savings and current deposits. The aggregate limit per customer is Rs 2,00,000. They are required to have a minimum of 25 per cent of their physical access points in rural areas.

Geographical concentration also poses a risk

Strength

Unique DTP (Distribution, Technology, Partnership) network helps in better customer servicing
Focus on technology development and in-house technological expertise
Customer centric and innovative business model
Highly experienced management team
Vision of socially inclusiveness and empowerment
High market share in the Micro-ATM segment

Future

The bank’s unique DTP (distribution, technology and partnership) framework, technological expertise and merchant-led distribution model enable it to reach a vast number of customers in under-penetrated markets while keeping its costs low.

Valuations

Valuations are really high and looking at growth prospects , it will take time for valuations to become reasonable

Should we apply?

One can avoid and wait for significant dip to enter. Also keep in mind better choices available in market for investment

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