Brokerage house Reliance Securities is advising investors to subscribe RBL Bank IPO. The initial public offer (IPO) of the private sector lender hit the capital market on Friday to raise around Rs 1,217 crore. It issue will close on August 23. It is the first IPO by a private sector bank in a decade after YES Bank.
Here are 5 reasons why Reliance Securities has given ‘Subscribe’ rating to the RBL Bank IPO:
1. RBL has a strong management team. The bank’s present management team has demonstrated noteworthy performance on all fronts in past six years. The management team of RBL Bank has a strong lineage in the banking and financial services domain with many of them having held senior positions with leading banks and insurance companies.
2. Loan book analysis suggests that RBL will sustain on robust growth path in the foreseeable future led by large market size and relatively low financing penetration in some of its key business segments. The lender offers a diverse range of loan products.
3. RBL Bank has developed multichannel distribution network comprising of 197 branches and 362 ATMs as of FY16- end. RBL’s branch network was initially concentrated in Maharashtra, but in the past three years, it opened 25 new branches across various states including in key cities i.e. Kolkata, Delhi, Mumbai, Chennai and Bangalore.
4. RBL has developed a robust risk management system that begins with selection and screening of customers, through documentation and use of technologies.
5. RBL provides fee and commission-based services across segments, primarily on the back of deep understanding of clients’ and industry’s need to develop suitable solutions, scalable technology platform capable of delivering services consistently. As of FY16- end, RBL’s non-interest income accounted for 37.5% of its net operating income. Decline in the contribution of fee-based income in last two years can be attributed to acquisition of fund-based businesses of RBS.