SKS Microfinance Limited which is tapping the capital markets with its IPO today announced the price band as Rs 850- Rs 985. The company is also offering a discount of Rs 50 to retail investors. The issue opens on Wednesday the 28th of July and closes on Monday the 2nd of August. The issue comprises of a fresh issue of 74,45,323 shares and an offer for sale of 93,46,256 shares making the total issue size 1,67,91,579 shares. At the lower end of the price band the issue would raise Rs 1427.28 crs awhile at the upper end it would raise Rs 1653.97 crs.

The post issue market cap of the company would be Rs 6117.67 crs at the lower end and Rs 7089.29 crs at the upper end. The post issue, fully diluted issued capital would be 7,19,72,542 equity shares. The company for the year ended March 2010 has made a net profit of Rs 174.84 crs or an EPS of Rs 24.29. The price earnings multiple at the issue price based on fully diluted share capital would be 34.99 at the lower band and 40.55 at the upper end of the price band.

The company is in the business of microfinance but the PE multiples are more than that of the leading private banks in India like ICICI Bank and Axis Bank which are trading at roughly 20 times historical earnings and HDFC Bank which is trading at 28 times historical earnings.

The IPO would be analysed over the next two days.