RBL Bank IPO – Should You Invest?
In the recent past, umpteen IPOs like Advanced Enzymes, Quess Corp,& Mahanagar, have listed on the bourses with stunning listing gains. But this time around, it will be nearly after a decade that a bank will get listed – RBL Bank.
RBL Bank is a Mumbai based private sector bank established in 1943 as a regional bank in Maharashtra and currently catering to large corporates, SMEs, retail and agricultural customers. As on FY16, RBL has a network of 197 branches and 362 ATMs across 16 Indian states and Union Territories. RBL has a clientele of ~1.90mn customers.
Investment Arguments
- Carving a New Path: FY10 to FY16 –
After the new management took charge in 2010, the bank embarked on a new trajectory – It has invested in technology, human capital, network and risk management framework which has resulted in impressive 58% cagr in earnings, 58% cagr in deposits and 62% cagr in advances over FY10-FY16. Also, post 2013, the bank has also shifted focus to the more profitable retail segment and has managed to maintain healthy asset quality, all this while.The bank has also invested in micro-payment and branchless banking solutions as well as a business correspondent network to expand the customer reach beyond the traditional branch service area.
- Successful Integration of RBS Portfolio Improves RBL’s Value Proposition –
RBL acquired business banking, credit card and mortgage portfolio businesses from Royal Bank of Scotland in FY14 as a part of its growth strategy. This acquisition added scale to RBL’s existing businesses and enabled it to expand its breadth of product offerings (credit card) and the geographic presence.
GreenEdge Wealth Services’ View – Attractive Valuations Could Offer Listing Gains
Given the improving proportion of retail book and robust growth trajectory, valuations at 1.75x on forward book looks favorable. We recommend investors to subscribe to the issue for listing gains. However, for the longer term, we feel there are better opportunities in the financial services space.
Issue Details
| Issue Open Date | 19th Aug, 2016, Fri |
| Issue Close Date | 23rd Aug, 2016, Tue |
| Issue Price (Rs.) | 224 to 225 |
| Market Lot | 65 |
| Minimum Application Size for Retail (Rs.) | 14,625 |