This smallcap payments bank has zoomed 57% in 6 wks; trades below IPO price

Fino Payments Bank surged 8 per cent on the BSE to hit an over two-year high of Rs 449.95 in Thursday's intra-day trade.

Shares of Fino Payments Bank (Fino Bank) surged 8 per cent to hit an over two-year high of Rs 449.95 on the BSE in Thursday’s intra-day trade, on improved business performance. 

In the past six weeks, the stock of this smallcap payments banks has zoomed 57 per cent after its June quarter (Q1FY25) results.

The bank witnessed a significant growth of 25 per cent in revenue during the quarter, by broadening and improving its range of digital products. The Bank's strategic emphasis on advanced technology has primed it for future opportunities.

The bank's management has also increased its revenue guidance to 25 per cent, from 20 per cent, for the current financial year 2024-25 (FY25).

Currently, Fino Bank is trading at its highest level since December 1, 2021. It made its stock market debut on November 12, 2021. However, the stock is quoting below its issue price of Rs 577 per share. It had hit a record high of Rs 583.35 on listing day.

Fino Bank is a subsidiary of Fino Paytech Limited, which is backed by marquee investors such as Bharat Petroleum, ICICI group, Blackstone, IFC, Intel and LIC, among others.

The Mumbai‐based Bank operates on an asset-light business model that principally relies on fee- and commission-based income generated from merchant networks and strategic commercial relationships.

Fino Bank is one of the six payment banks operational in India and is now looking to become a small finance bank (SFB). The Bank has also applied to the Reserve Bank of India for a license to convert into a SFB.

As the bank plans to transition into a SFB, its focus for FY25 will be on strengthening the brand to attract the best talent. The emphasis will be on bringing new ideas and institutionalising best practices to retain and grow, the Bank said.

Meanwhile, in Q1FY25, Fino Bank facilitated transactions worth Rs 1.05 trillion, of which Rs 44,197 crore were processed digitally.

The bank's profit before tax (PBT) grew by 30 per cent year-on-year (Y-o-Y) to Rs 24.3 crore, while revenue increased by 25 per cent Y-o-Y to Rs 436.90 crore. Its margins remained range bound around 31 per cent.

With digital payments expected to dominate the retail digital payments landscape, the bank can further expand its services in Unified Payments Interface (UPI)-based transactions, which are projected to reach over 1,000 million transactions per day by FY27.

The bank can also leverage growth in the Indian fintech industry to introduce innovative financial products in sub-sectors such as BankingTech, PayTech, and InsurTech.

Further, ongoing government initiatives to promote digital financial services and a cashless economy can help the bank in expanding its digital services and reaching a broader customer base, especially in underpenetrated markets, Fino Bank said in its FY24 annual report.

The increasing acceptance of technology, like mobile point of sale (mPOS) devices, among small merchants suggests a growing market for the bank’s digital solutions that are tailored for small businesses and micro-entrepreneurs, it added.

The India fintech market size is projected at $111.14 billion in 2024, and anticipated to grow to $421.48 billion by 2029 at a compound annual growth rate (CAGR) of 30.55 per cent between 2024 and 2029. The country has become a hub for a number of FinTech startups. 

Government initiatives to promote the digitisation of financial systems and a cashless economy has supported consumers' shifting focus towards digital alternatives for financial transactions and services, Fino Bank said.

The Indian fintech industry consists of sub-sectors such as BankingTech, LendingTech, PayTech, RegTech, InsurTech and WealthTech, it added.