RBL bank IPO review


RBL bank, earlier name Ratnakar bank was established in 1943 and currently it is one of the fastest growing private banks. It provides customer centric solution for almost all segments of Indian market like large institutions, Small Entrepreneurs, Individuals, etc.

RBL boasts of robust management which took charge in 2010. The current MD and CEO of RBL bank is Mr. Vishwavir Ahuja. He previously served as MD and country CEO of Bank of America for the Indian subcontinent. Under his able and creative leadership, RBL has quickly transformed from a traditional bank to new age bank with usage of latest technology. In the last six years RBL has invested heavily in building strong banking platform.

RBL has a total business size of over Rs 31000 crore. It has around 201 branches and 365 ATMs across 16 States and Union Territories.

Issue Details

·         Issue date: 19th August 2016 to 23rd August 2016
·         Issue price: Rs 224 to Rs 225.
·         Face value of shares: Rs 10.
·         Market lot: 65 shares (in multiples of 65 thereafter).


Objective of Issue

The IPO consists of fresh issue of shares amounting to Rs. 832.50 crore and an Offer of Sale (OFS) of up to 1.69 crore shares by a couple of existing shareholders.


Financial details of company

Financial summary (in Crore Rupees)

FY 12
FY13
FY14
FY15
FY16
Net Interest income
186.8
257.5
341.6
556.4
819.2
Non Interest income
67.1
126.4
261
403.4
490.5
Operating profit
113.9
159.6
178.7
360.1
542.4
Net profit
65.1
92.9
92.7
207.2
292.5

As per experts at upper price band of Rs 225 per share , the RBL bank IPO is priced at 1.75x FY18E book value and 13.8x FY18E EPS.


Pros of company

1.    Aggressive credit growth with emphasis on asset quality.
2.    Increase in cost efficiency led by operational leverage.
3.    Strong Management team with vast experience.


Concerns with Company

1.    Inability to garner CASA growth in accordance with the strategy.
2.    Concentration of deposits exposes to liquidity risk.
3.    Higher sector exposure may lead to delinquency risk.
4.    Regional concentration in western and south-western India.


Final Verdict

This once in a decade IPO looks attractively priced and a good bet. RBL bank IPO is the first bank IPO after Yes Bank IPO in 2005. Major rating agencies have given a Subscribe rating to this IPO.


Disclaimer

The above mentioned analysis is as per my research. Before making any investment please consult your financial adviser and use your own analysis.

 First Edit : As expected the RBL IPO has garnered a great response and is subscribed over 69 times at the time of final closing on 23rd August. 

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