Fino Payments Bank

about 2 years ago
Fino Payments Bank

IPO Size: Rs. 1,200 cr IPO -  

  • Rs. 300 cr fresh issue to augment capital
  • Rs. 900 cr OFS by promoter Fino Paytech

Price band: Rs. 560-577 per share

Mcap: Rs. 5,702 cr, implying 21% dilution

IPO Date: Fri 29th Oct to Tue 2nd Nov 2021, Listing: 12th Nov 2021

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.


Company Overview:

Company earns fee income for digital payment products and services offered digitally to 7.8 lakh merchants, mainly in rural areas of UP, Bihar, MP, such as debit cards, micro-ATM, bill payment, and third-party financial products like insurance and gold loans etc.



  1. Profitable since Q4FY20, so no cash burn; although profits miniscule - Rs. 3 cr PAT in Q1FY22 and Rs. 20 cr in FY21, on fee income of Rs. 200 cr and Rs. 771 cr respectively.
  2. Growing business: Revenue grew 14% in FY21 and 36% YoY in Q1FY22, as transactions increased due to higher government relief for covid.
  3. Scalable asset-light business model, with more merchants implying increased transactions and higher fee revenue.



  1. Lacks Scale: Despite covering 90% of India’s districts, Fino serves 7.7 lakh merchants over 218 lakh for Paytm, highlighting a risk of Fino remaining a marginal player, if it cannot ramp-up quickly, as most fintech companies are essentially vying for the same customer (similar to micro-finance in last decade).
  2. High Competition: Although the opportunity is large, so is competition, compliance and operational costs, which explains why profits are not easy to come by. Interest arbitrage on deposits is also low, as payments bank cannot lend. Presently, benefit of operating leverage is not reflected in company’s financials.
  3. Not an asset based bank, so no credit risk and cannot be valued on PBV multiple. On a PE basis, FY21 multiple comes to an unjustified 210x


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