Please refer to important disclosures at the end of this report
1
Fino payment Bank Ltd was incorporated in 2017 and offers a wide portfolio of
digital financial products and services in India. It offers such products and services
to target market via a Pan-India distribution network and proprietary technologies,
and since 2017, it has grown its’ operational presence to cover over 90% of
districts as of September 30, 2021. The bank’s products and services includes
various current accounts and savings accounts (“CASA”), issuance of debit card
and related transactions, facilitating domestic remittances, open banking
functionality via their Application Programming Interface, withdrawing and
depositing cash (via micro-ATM or Aadhaar Enabled Payment System “AePS”) and
Cash Management Services (“CMS”). It operates an asset light business model
that principally relies on fee and commission based income generated from
merchant network and strategic commercial relationships.
Positives: (a) Unique DTP (Distribution, Technology, Partnership) network helps in
better customer servicing (b) Focus on technology development and in-house
technological expertise (c) Customer centric and innovative business model (d)
Highly experienced management team.
Investment concerns: (a) Inability to generate income from fee and commission-
based activities. (b) Rely extensively on IT systems, success depends on ability to
innovate, upgrade and respond to new technological advances. (c) Subject to
stringent regulatory requirements and prudential norms. (d) Cyber threats
attempting to exploit network may cause damage to reputation.
Outlook & Valuation: Fino payments bank has posted strong a 46.0% CAGR in
total revenues between FY2019-21 and has also turned around its operations and
reported profits of `20 crore for the first time in FY2021. At the higher end of the
price band the stock would be trading at P/E of 220x FY2021 fully diluted EPS of
`2.6 which is expensive. Despite strong growth prospects, we believe that
valuations do not justify the premium and hence we have a NEUTRAL
recommendation to the IPO.
Key Financials
FY2019
FY2020
FY2021
371.1
691.4
791.0
-
86.3
14.4
-62.4
-32.0
20.5
-
-48.6
-163.9
(8.0)
(4.1)
2.6
(72.2)
(140.5)
219.9
27.8
34.6
29.9
(38.5)
(24.6)
13.6
(9.1)
(5.1)
2.0
12.1
6.5
5.7
Source: Company, Angel Research.
Note: Valuation ratios at upper price band.
NEUTRAL
Issue Open: Oct 29, 2021
Issue Close: Nov 02, 2021
Offer for Sale: `900 cr
QIBs 75% of issue
Non-Institutional 15% of issue
Retail 10% of issue
Promoters 75.0%
Others 25.0%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `83.2cr
Issue size (amount): `1,200 cr
Price Band: `560-577
Lot Size: 25 shares and in multiple thereafter
Post-issue mkt. cap: * `4,660 cr - ** `4,801 cr
Promoters holding Pre-Issue: 100%
Promoters holding Post-Issue: 75%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Fresh issue: `300 cr
Issue Details
Face Value: `10
Present Eq. Paid up Capital: `78.0 cr
Jyoti Roy
+022 39357600, Extn: 6842
jyoti.roy@angelbroking.com
Fino Payments Bank Limited
Fino Payments Bank |IPO Note
October 28, 2021
Fino Payments Bank | IPO Note
Oct 28, 2021
2
Company background
Fino payments Bank was incorporated as ‘Fino Fintech Foundation’ dated June 23,
2007. The company operates an asset-light business model that is underpinned by
the "phygital" model and relies on merchant networks and other participants. It has
built a Pan-India presence with 724,671 merchants (own and API) as of June 30,
2021, which are typically located in Tier-2 and Tier-3 towns (based on
population). Additionally, FPBL 54 branches and 130 Customer Service Points
("CSPs") as of June 30, 2021.
Issue details
The issue comprises of Fresh Issue upto `300 Cr and OFS of 15,602,999 Eq
Shares amounting upto ` 900.29 Cr only.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter & Promoter Gp.
78,014,996
100.0%
62,411,997
75.0%
Public
0
0.0%
20,802,305
25.0%
Total
78,014,996
100%
83,214,303
100.0%
Source: Company, Angel Research & RHP.
Objectives of the Offer
Augmenting Bank’s Tier – 1 capital base to meet its future capital
requirements.
To meet the expenses in relation to the offer.
Key Management Personnel
Rishi Gupta is the Managing Director and CEO of the Bank. He holds a bachelor’s
degree in commerce from University of Delhi. He is also a qualified chartered
accountant and cost and works accountant and member of ICAI and ICWAI
respectively.
Mahendra Kumar Chouhan is a part time chairman and an independent
director in the Bank. He has previously served on policy making and
regulatory committees such as SEBI Committee on Corporate Governance as
well as the Ministry of Corporate Affairs Committee for the National Policy on
Corporate Governance.
Suresh Kumar Jain is an independent director in the Bank. He has been a
banker for over 36 years and was a General Manager on Bank of India, He
was selected by Government of India as Executive Director of Union Bank of
India and retired in May 2014.
Punita Kumar Sinha is an independent director in the Bank. She holds a
bachelor’s degree in chemical engineering from IIT Delhi, MBA (Finance) from
Drexel University and Ph.D. from University of Pennsylvania. She is also a
qualified CFA. She has experience in investment management and financial
markets. Previously she has worked as a senior managing director of
Blackstone – Asia Advisory Group.
Fino Payments Bank | IPO Note
Oct 28, 2021
3
Exhibit 1: Consolidated Profit & Loss Statement
Y/E March (` cr)
FY2019
FY2020
FY2021
Q1FY2022
Total operating income
371.1
691.4
791.0
206.2
% chg
-
86.3
14.4
36.3
Total Expenditure
428.0
713.6
761.0
200.1
Operating expenses
427.0
712.5
757.0
200.1
Provisions and contingencies
0.9
1.0
4.0
-
Operating Profit
-56.9
-22.2
30.0
6.2
% chg
-
-61.0
-
29.7
(% of Net Sales)
-15.3
-3.2
3.8
3.0
Interest expended
5.5
9.9
9.5
3.1
Recurring PBT
-62.4
-32.0
20.5
3.1
% chg
-
-48.6
-
69.0
Exceptional item
-
-
-
Tax
-
-
-
PAT (reported)
-62.4
-32.0
20.5
3.1
% chg
-
-48.6
-
69.0
(% of Net Sales)
-16.8
-4.6
2.6
1.5
Basic & Fully Diluted EPS (Rs)
-8.0
-4.1
2.6
0.4
Source: Company, Angel Research
Exhibit 2: Consolidated Balance Sheet
Y/E March (` cr)
FY2019
FY2020
FY2021
Q1FY2022
SOURCES OF FUNDS
Equity
44.6
44.6
44.6
44.6
Reserve & Surplus
117.5
85.5
106.0
109.1
Net worth
162.1
130.1
150.5
153.7
Borrowings
82.9
110.8
180.8
211.3
Deposits
47.5
117.5
242.8
251.3
Other Liab. & Prov.
391.5
265.6
436.1
403.9
Total Liabilities
684.1
624.0
1010.3
1020.2
Cash Balances
157.4
130.8
88.3
47.8
Bank Balances
230.9
171.2
182.5
166.8
Investments
73.2
128.3
503.6
557.8
Advances
0.1
0.1
0.1
0.1
Fixed Assets
42.2
49.5
64.2
80.1
Other Assets
180.3
144.2
171.6
167.6
Total Assets
684.1
624.0
1010.3
1020.2
Source: Company, Angel Research
Fino Payments Bank | IPO Note
Oct 28, 2021
4
Exhibit 3: Consolidated Cash flows
Y/E March (` cr)
FY2019
FY2020
FY2021
Q1FY2022
Operating profit before changes
-40.3
-4.5
81.5
10.5
Net changes in working capital
63.6
-86.0
-123.2
-72.7
Cash generated from operations
23.3
-90.5
-41.7
-62.2
Direct taxes paid (net of refunds)
5.3
6.8
9.5
-1.8
Net cash flow operating activities
28.6
-83.7
-32.2
-64.1
Addition to fixed assets
-13.8
-30.9
-69.0
-22.7
Sale of Fixed assets
0.2
0.4
0.1
-
Cash Flow from Investing
-13.6
-30.5
-68.9
-22.7
Net proceeds from borrowings
35.0
27.9
70.0
30.5
Cash Flow from Financing
35.0
27.9
70.0
30.5
Inc./(Dec.) in Cash
50.0
-86.3
-31.2
-56.3
Opening Cash balances
338.3
388.3
302.0
270.8
Exchange effect
0.0
0.0
0.0
0.0
Closing Cash balances
388.3
302.0
270.8
214.5
Source: Company, Angel Research
Key Ratios
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
(72.2)
(140.5)
219.9
P/BV
27.8
34.6
29.9
Mkt cap/Total Revenue
12.1
6.5
5.7
Per Share Data (Rs)
EPS (Basic)
(8.0)
(4.1)
2.6
EPS (fully diluted)
(8.0)
(4.1)
2.6
Book Value
20.8
16.7
19.3
Returns (%)
ROE
(38.5)
(24.6)
13.6
ROA
(9.1)
(5.1)
2.0
Source: Company, Angel Research
Fino Payments Bank | IPO Note
Oct 28, 2021
5
Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelone.in
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