i. Mr. Parveen Kumar Gupta is the part time non – executive chairman and Independent Director of the Bank. He holds a bachelor’s degree of commerce from Guru Nanak Dev University. He has been an associate member of The Institute of Company Secretaries of India since 1986. He is also a certified associate of the Indian Institute of Bankers. Prior to joining the Bank, he was associated with State Bank of India as their managing director (retail & digital banking) till his retirement on superannuation and Bank of Baroda as its senior advisor. ii. Mr. Govind Singh is the Managing Director and chief executive officer of the Bank. He holds a bachelor’s degree in commerce from Delhi University. He is a certified associate of the Indian Institute of Bankers. He was previously the assistant general manager at ICICI Bank Limited. He has received an award of excellence for Apy Big Believers (ABB) 4.0 by Pension Fund Regulatory and Development Authority in Fiscal 2022. He was the managing director and chief executive officer of the Promoter. He has also been associated with Surya Fincap Limited, UTI Bank Limited, Allahabad Bank, State Bank of Patiala and Bank Internasional Indonesia. iii. Mr. Kajal Ghose is an Independent Director of the Bank. He holds a bachelor's degree in commerce from Ranchi University and a diploma in human resources development from All India Institute of Management Studies, Chennai. He is a certified associate of the Indian Institute of Bankers. He previously worked as the chief general manager at State Bank of India, as a consultant with PayU Payments Private Limited and at Stratosphere IT Services Private Limited and Kovid Group Analytics India Private Limited. He has also been a member of the board of advisors of Datawise Management Services India Private Limited. He currently is a member of the investment committee of New Leaf Investment Advisors LLP.

 

Peers	Loan Book (cr)	Revenue FY23	BV	RoNW	PAT FY23	Gross NPA	P/E	P/B	Mkt Cap
Utkarsh SFB IPO	13,000	2,804	22.33	16.00%	405	3.23%	6.76	1.09	2725
AU SFB	47,000	9,240	164.64	19.00%	1428	1.66%	35	4.63	50,803
Fusion Micro Finance	8,000	1,800	230.74	21.00%	387	3.46%	15	2.53	5,881
Ujjivan SFB	22,000	4,754	20.25	31.00%	1100	2.88%	7.09	2.05	8,132
Equitas SFB	20,000	4,831	46.44	13.00%	574	2.76%	18	2.02	10,460
Suryoday SFB	5,000	1,281	149.28	4.90%	78	3.13%	23	1.15	1,825

Review and Recommendation of Utkarsh Small Finance Bank by IZ team is 5/10 A) Strengths of Utkarsh Small Finance Bank: 1. Strong Growth: Utkarsh Small Finance Bank has achieved impressive growth in its Gross Loan Portfolio, recording the third fastest growth among SFBs in India between Fiscal 2019 and Fiscal 2023. This growth highlights the bank's ability to expand its lending operations and attract customers. 2. Microfinance Expertise: The bank has a strong foundation in microfinance, with its promoter, Utkarsh CoreInvest Limited, initially focused on providing microfinance to unserved and underserved segments. This expertise in microfinance allows the bank to target specific customer segments and cater to their financial needs effectively. 3. Strategic Expansion: Utkarsh Small Finance Bank has strategically expanded its operations in states where it can leverage the prior microfinance experience of Utkarsh CoreInvest Limited. This approach helps the bank capitalize on its existing knowledge and networks in specific regions, enabling efficient expansion and growth. 4. Focus on Rural and Semi-Urban Areas: The bank's operations are primarily focused on rural and semi-urban areas, which are often underserved by traditional banks. By targeting these regions, Utkarsh Small Finance Bank can address the financial needs of individuals and businesses in these areas and contribute to their economic development. 5. Compliance and Recognition: Utkarsh Small Finance Bank has obtained the necessary regulatory approvals and licenses, including the RBI In-Principle Approval and the RBI License to establish and operate as an SFB. The bank's inclusion in the second schedule to the RBI Act as a scheduled commercial bank further strengthens its credibility and compliance with regulatory requirements. B) Weaknesses of Utkarsh Small Finance Bank: 1. Concentration Risk: The bank's operations are heavily concentrated in the states of Bihar and Uttar Pradesh, which accounted for a significant portion of its Gross Loan Portfolio. While these states have shown good asset quality, relying heavily on specific regions may expose the bank to regional economic or political risks. 2. Dependence on Microfinance: Despite efforts to diversify its product portfolio, Utkarsh Small Finance Bank remains dependent on its microfinance business. While microfinance is a focused business segment, reducing dependence on it and growing other loan categories may be crucial for the bank's long-term sustainability and risk mitigation. 3. Limited CASA Ratio: The bank's Current Account Savings Account (CASA) ratio, a measure of low-cost deposits, has shown a decline from 22.37% in 2022 to 20.89% in 2023. Increasing the CASA ratio is essential for maintaining a stable funding base and reducing reliance on higher-cost deposits. 4. Reliance on Business Correspondents and Direct Selling Agents: Utkarsh Small Finance Bank has tie-ups with business correspondents (BCs) and direct selling agents (DSAs) to source customers and grow its asset portfolio. While these partnerships can enhance customer reach, the bank needs to ensure proper risk management and maintain control over customer acquisition and loan underwriting processes. 5. Limited Digital Penetration: Although the bank utilizes technology for transactional ease and digital onboarding of customers, its digital services seem to have a relatively low penetration. As the banking industry increasingly embraces digital transformation, Utkarsh Small Finance Bank may need to invest further in technology to enhance its digital offerings and customer experience. C) Valuation If the numbers presented in the books are accurate, it seems that investment bankers have priced the stock very effectively. In the past few months, small finance banks have been performing exceptionally well. Utkarsh Small Finance Bank, with a price-to-book ratio of 1.09, stands out as the most affordable small finance bank compared to its competitors. Additionally, with the resurgence of loan growth, the company is poised for success even after it goes public.

Utkarsh Small Finance Bank Limited Utkarsh Tower, NH – 31 (Airport Road), Sehmalpur, Kazi Sarai, Harhua, Varanasi - 221 105 Phone: +91 542 660 5555 Email: shareholders@utkarsh.bank Website: https://www.utkarsh.bank/