Should you hold Fino Payment Bank shares for long term after weak listing?

The scrip got listed at Rs 548 on the BSE, a discount of 5 per cent. However, the counter traded in the range of Rs 535-585 during the first few minutes.

Following the muted and range-bound trade, investors were on their toes. They were worried if their trading strategy should be to sell or hold Fino Payments Bank. Analysts said a flat listing was expected.

Vikas Jain, Senior Research Analyst, Reliance Securities, said the listing was on expected lines, thanks to the valuations. All small finance banks and payment banks have disappointed the investors, he said. “There are better placed private and PSU lenders at decent valuations. Investors should consider investing in banks that have witnessed a decent correction from their recent peaks,” Jain added.

The initial stake sale of Fino Payment Bank was open for subscription between October 29 and November 2. The stock saw no activity in the grey market since the announcement of the issue.

Ajit Mishra, Vice-President, Religare Broking, said the lender was facing challenges over valuations and profitability. However, it was positive over the counter in the longer term. “One should not read much into the line following the listing,” he added. “It is a long-term play and investors can hold it if they have a long-term view. Also, fresh buys can be made for a longer horizon.”

The lender raised Rs 1,200.29 crore via the primary route, selling its shares in the range of Rs 560-577 a piece. Investors made their bids in multiples of 25 shares.

Short-term investors should exit if they find decent gains after listing, said Vishal Balabhadruni, BFSI Analyst at CapitalVia Global Research. That way, he added, they can protect their investment after the tepid listing.

The issue received a muted response from investors. It was subscribed only 2.03 times. Only retail bidders seem to have fancied the issue, as their quota was subscribed 5.92 times. The portion reserved for qualified institutional buyers (QIB) was subscribed 1.65 times, whereas non-institutional investors bid for merely 21 per cent for their allocation. Even employees bid for only 93 per cent of their allocation.

Saurabh Joshi, Research Analyst at Marwadi Shares and Finance, who had advised subscribing to the issue, said the listing was below expectations. He, too, suggested investors hold the shares for a long term. “It is a growing fintech company offering a diverse range of financial products, has an asset-light and scalable business model with operational experience and expertise,” he added, asking investors to buy or accumulate on dips.

Fino Payments is a specialised bank that provides services in a cost-effective way.

Parth Nyati, founder, Tradingo, said the counter might continue to remain under pressure because of valuation concerns, competition and regulatory challenges. “Aggressive investors can look to buy it at 10-20 per cent correction from here for the long term,” he added.