CSB Bank IPO has turned out to be a mega hit, after the Rs 410 crore public offer got oversubscribed by more than 86.80 times on the last day of issue. The issue received bids for a total of 100.25 crore shares as against the issue size of 1.15 crore implying, implying total subscription of 86.80 times. Retail investors bid for a total of 9.20 crore shares as against the 20.29 lakh shares reserved for them, implying a demand of more than 44 times. The non-institutional investors (NII) portion saw the highest demand, with thir portion being subscribed 165 times. The QIBs bid for a total of 39.18 crore, as against the 63 lakh shares reserved in this category, implying a subscription of 165 times.
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Formerly known the Catholic Syrian Bank, the Kerala-based private sector lender had looked to raise up to Rs 410 crore from its public issue. CSB Bank’s IPO is being carried out to meet RBI’s reglulation with regard to listing. The public offer contains a fresh issue of shares to raise up to Rs 24 crore, and an offer for sale (OFS) of 1.97 crore shares by existing investors through which it will sell Rs 385 crore worth shares. The issue had opened for subscription on Friday, 22nd November.
Many brokerages had given a thumbs up to the issue. “At the upper price band, the issue is valued at 2.4x P/B on 1HFY20 post issue diluted basis. Post the acquisition by Fairfax group, the realigned operational strategy has helped the company to report profits in 1HFY20. The company is focused to improve profitability and growth going ahead. We believe that given the strong promoter backing and turnaround in profitability, investor can Subscribe to the IPO for listing gains,” Motilal Oswal said in a report.
While the bank’s transformation in the last few years has been remarkable, the valuations looks stretched, according to Reliance Securities. “Amidst a weak operating environment, the next phase could be more challenging. Moreover, valuation at 2.4x of 2HFY20 adjusted book looks to be stretched with established players like RBL, Federal, and DCB with higher RoA levels trading at lower PB multiples of below 2x,” the firm said in its report.
