CSB Bank shares to debut tomorrow after stellar IPO: Listing day strategy for investors

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Updated: December 03, 2019 4:22 PM

After a blockbuster response to its IPO, CSB Bank shares will list on the exchanges tomorrow. According to analysts, the issue could list at a steep premium.

The venture will make use of the reach of BSE and EbixCashThe venture will make use of the reach of BSE and EbixCash

After a blockbuster response to its IPO, CSB Bank shares will list on the exchanges tomorrow. CSB Bank IPO had turned out to be a mega hit, after the Rs 410 crore public offer got oversubscribed by more than 86.89 times on the last day of issue. According to analysts, the issue could list at a steep premium. “CSB Bank is expected to list at a premium given the high demand for the issue,” Mona Khetan, banking analyst, Reliance Securities told Financial Express Online. Astha Jain, Sr Research Analyst at HEM Securities expect CSB bank to list at premium anywhere between Rs 55-65  over final issue price of Rs 195 per share. 

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Khetan advises investors to book profits, as the bank will take time to deliver even a 1% RoA amidst a weak operating environment, with higher exposure to the MSME segment. “It would be better to buy shares of other bank with more established RoA like a Federal, RBL and DCB, which trade at a discount to CSB Bank,” explained Khetan. According to Ajit Mishra, VP Research, Religare Broking, while CSB Bank shares may see decent listing gains, volatile market conditions could limit gains. “Investors can partially book profits if the gains are 20%+. From long-term perspective though, it has good scope for growth going forward and investors may continue to hold some quantity,” Mishra told Financial Express Online. 

Umesh Mehta, Head of Research, Samco Securities noted that investors would be better off to book profits in entirety post listing gains. However, since the bank has in the past couple of years witnessed a turnaround because of the new management, investors can keep this stock on their watchlist and observe the fundamentals going forward, he said. “If the competitive nature of this sector is sustainable for CSB, then investors can consider it again in the future,” Mehta told Financial Express Online.

“As CSB Bank looks strong, we are assigning one year price target of more than 50% above issue price. The bank has strong channel network and trusted brand in South India with strong capital base post FIHMs investment in bank,” Astha Jain said.  

CSB Bank IPO had seen strong subscription across the segments. 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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