Suryoday – ‘Sunrise’ in Sanskrit, signifies new dawn. It has received a Micro-Finance license from RBI in 2008, and within 8 years converted into a successful Small Finance Bank.
(i) The company has shown exemplary performance in the year FY19-20 wherein, it has clocked Revenue of 854 Cr and PAT of 110 Cr as compared to 597 Cr and 86 Cr last year, respectively, representing a stupendous growth.
Revenue contribution (Cr):
(ii) The loan book has grown from 3761 Cr to 5264 Cr in FY20.
(iii) NIM – It represents how much is the net earning of the bank on loans given in the market.
Formula- ( Interest Earned- Interest Expensed)/Loan book
|Year||Interest Earned||Interest Expensed||Loan book||NIM|
The NIM has increased from 12.24% in FY19 to 13.88% in FY20- Good Sign
(a) ROE has reduced in FY20 to 11.21% from 14.26%.
(b) D/E is manageable.
(c) G.NPA and N.NPA are under control.
Business Impact Due to COVID-19
As per management commentary, the loan disbursement in the lock-down period is sluggish and likely to improve as lock-down is removed in phases.
The Bank has made an additional provision of 65.99 crores (Retail banking 57.43 crores and Corporate banking 8.56 crores) for the potential impact of CoVID-19 as of March 2020. This provision is equivalent to 60% of FY20 PAT.
The two important parameters to check the performance of the bank is loan growth and ROE.
Loan growth( in FY20) = 27% (Excellent)
ROE (in FY20) = 11.48% (Good)
Valuation– The book value of Suryoday Small Finance Bank in FY20 stands at 123 per share.
The latest price of the Suryoday Small Finance Bank in unlisted market is 260.
P/B = 2.11x ( Cheaper than AU Small and Ujjivan Small bank)
Last 5 years performance of the Suryoday Small Finance Bank
The IPO as per RBI regulation was supposed to come in 2020. However, due to COVID-19 impact, it may be postponed to next year.