Title: – Relationship of Suryoday Small Finance Bank Limited
Author: – Sejal Pandey
Roll no. 021230023389
Introduction: – The Bank was originally incorporated as Suryoday Micro Finance Private Limited at Chennai Tamil Nadu as a private limited company under the Companies Act 1956 pursuant to the certificate of incorporation dated 10 November 2008 issued by the Assistant Registrar of Companies Tamil Nadu Andaman and Nicobar Islands at Chennai. Subsequently our Bank was converted into a public limited company and the name of our Bank was changed to Suryoday Micro Finance Limited and a fresh certificate of incorporation dated 16 June 2015 was issued by the RoC. Our Bank was granted the in-principle and final approval to establish a small finance bank (SFB) by the RBI pursuant to its letters dated 07 October 2015 and 26 August 2016 respectively. Pursuant to our Bank being established as an SFB the name of our Bank was changed to Suryoday Small Finance Bank Limited and a fresh certificate of incorporation was issued by the RoC on 13 January 13 2017. The AUM grew by 71% to Rs 3003 crore with 20% of this contributed by Affordable Home Loans Commercial Vehicle Finance and SME & NBFC funding. The number of banking outlets increased from 241 in March 2018 to 382 in March 2019 comprising of 211 asset centres and 171 other outlets (including 68 URCs). During the FY2020the bank has issued 4500000 equity shares through private placement pursuant to shareholder’s approval aggregating to Rs 63 crore. The Gross Loan Portfolio at Rs 3742 crore (excluding the impact of write-off) grew by 26% over that of the previous year and the total deposits at Rs 2849 crore grew by 79% over that of the previous year. The number of banking outlets increased from 382 in March 2019 to 477 in March 2020 including 133 Unbanked Rural Centres. During the second quarter of FY21 ended 30 September 2020 the Bank issued 2390020 equity shares through private placernent pursuant to shareholder’s approval aggregating to Rs 62.14 crore. The Bank also issued unsecured subordinated non-convenable debentures for Rs 100 crore during the quarter ended 30 September 2020.During the year ended 31 March 2021 the Bank successfully completed lnitial public offer (lPo) and got listed on 26 March 2021 on National stock Exchange (NSEJ and BSE Ltd.
Objectives: – To calculate beta and find it’s significance
Views and Reviews: –
Microfinance is growing fast as the market is currently under-penetrated. Players with a large scale are able to grow even faster as they have access to capital and better risk management versus smaller ones. Within that Small Finance Bank can accept deposits as well as CASA. This not only secures their funding but also provides low-cost financing for lending purposes.
Suryoday SFB is an emerging small finance bank with a little track record as a bank with evident low CASA and higher cost of borrowings. But as the bank grows with an increase in loans geographically/product-wise and CASA, it will have improving profitability and better risk management.
Currently, Suryoday SFB has a high NPA of ~9% (Net NPA 5.4%) and CASA of just 13% which may jeopardize its financing plans to pursue higher growth. We believe Bandhan Bank offers a much better risk-reward versus Suryoday SFB as it is yet to prove its business model.
Data Analysis:
The regression equation form:
Y = a + b*X
Where, Y is the dependent variable- M & M ltd.,
X is the independent variable- Nifty 50
a is the intercept,
b is the slope.
Intercept, a = 0.007469
Slope, b = 0.037797
R Square = 0.171545
F = 9.73213
So, the regression equation is given by-
Suryoday Small Finance Bank ltd. = a + b(Nifty50)
Y = 0.007469 + 0.037797* X
The above equation shows us the relationship between Patanjali Foods Ltd and Nifty
Regression Coefficient: The regression coefficient of Nifty50 is 1.0624 which indicates that every 1 unit increase in the Nifty50, prices of Suryoday small finance bank ltd shares are expected to increase
- Square: In this case, the R Square is 0.17, which indicates that 17% of the sample variation in the Suryoday small finance bank ltd share prices is explained by the Nifty. Remaining 83% of the total variation in the Suryoday small finance bank ltd share price is unexplained.
Conclusion: Beta for 3 months is 0.6. Beta is calculated against NIFTY 50. which is less than 1, it means that Suryoday Small Finance Bank Limited is good for long term investment.
References:
Suryoday Small Finance Bank IPO Review: Not so good player in good sector; Avoid
https://www.nseindia.com/reports-indices-historical-index-data ,
https://www.nseindia.com/get-quotes/equity?symbol