RBL Bank IPO subscribed 66% on day 1; brokerages bullish

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New Delhi | Updated: August 19, 2016 6:18:09 PM

Brokerage firms such as Angel Broking, Hem Securities and Ajcon Global are bullish on RBL Bank IPO which is set to hit capital market on August 19 (Friday).

RBL Bank IPOBrokerage firms such as Angel Broking, Hem Securities and Ajcon Global are bullish on RBL Bank IPO which is set to hit capital market on August 19 (Friday).

Brokerage firms such as Angel Broking, Hem Securities and Ajcon Global are bullish on RBL Bank IPO which is set to hit capital market on August 19 (Friday). The initial public offer (IPO) will close on August 23. RBL Bank Ltd was formerly known as Ratnakar Bank and has around 73 year old history. The bank has plans to raise around Rs 1,215 crore through the initial public offer (IPO) at a price band of Rs 224-225. It is the first IPO by a private bank since 2005 when YES Bank had hit the stock markets.

For the financial year ended 2015-16, RBL Bank registererd a net profit of Rs 296.80 crore, up 42.38 per cent against Rs 208.45 crore last year. Profit after tax figures of the lender was at 65.74 for the financial year ended March 2012. Shares of the bank are proposed to be listed on NSE and BSE both. The bank has plans to utilise the net proceeds to augment the bank’s Tier-I capital base to meet RBL’s future capital requirements. The bank on Thursday raised Rs 364 crore from anchor investors by selling shares at upper price band of Rs 225.

The IPO of RBL Bank subscribed by 66 per cent on the first day of offer till 5 pm, according to the data available with stock exchanges.

According to Ajcon Global, at the upper end of the price band of Rs 225, the public offer is valued at 2.1 times at post issue P/BV which is cheap as compared to its immediate peers in mid – sized private banking space. With due consideration to factors like one of India’s fastest growing private sector banks in the last six years, robust corporate governance framework as well as experienced management team, transformed from traditional bank into a ‘New Age’ bank, broad-based shareholder and capital base, leading and reputed private equity players invested which instills confidence on the operations and risk management of the bank, focus on operational quality and scalability, strong growth in loan book with minimal NPAs and decent return on equity of of 11 per cent and return on asset of 1 per cent, the brokerage firm recommends ‘Subscribe’ to the RBL IPO.

Hem Securities in a research note said, “RBL Bank registered a strong compounded annual growth rate (CAGR) in its financials from FY12 to FY16. The bank posted around 46 per cent CAGR in its bottomline from 2011-12 to 2015-16 while bank’s advances has grown at CAGR of 51 per cent during the same year which are among one of the best in industry. Hem Securities has ‘Subscribe’ rating on the IPO on account of robust financial growth, superior asset quality and strong potential for future growth.

Brokerage firm Angel Broking believes that the public offer is attractively priced taking into account the valuations at which other mid-sized private sector banks are currently trading. Angel Broking has given ‘Subscribe’ rating to the issue.

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