rbl logo 2

(Related Post  : http://ipoandmore.com/2016/08/15/rbl-bank-comparison-with-peers/ )

Issue Date : Friday, August 19, 2016 –   Tuesday, August 23, 2016

Price Band :  Rs. 224 – 225

Issue Size : Fresh Issue of Rs.832.50 Crores and + Offer for Sale of up to 1,69,09,628 shares ( 380 Crores).  Total Issue Size of approx Rs. 1230 crore

Lead Managers :  Kotak Mahindra Capital, Axis Capital, Citigroup ,Morgan Stanley, HDFC Bank, ICICI Securities, IDFC Securities, IIFL Holdings and SBI

Download RHP of RBL bank

About The Company  ( Website http://www.rblbank.com  )

Incorporated on June 14, 1943, RBL Bank Limited (“RBL”) a small Regional Bank in Maharashtra commenced their operation with 2 Branches in Kolhapur and Sangli. In August 1959, it was categorized as a “Scheduled Commercial Bank”. Ratnakar Bank remained more of  a regional bank with major focus on Maharashtra . . The transformation of he bank strated in  2010 under the new management led by CEO Vishwavir Ahuja and it went of clutch of placements to rope in reputed international and local PE funds. As part of the growth strategy, RBL acquired certain Indian businesses of the Royal Bank of Scotland (“RBS”), including the RBS’s Business Banking, Credit Card and Mortgage Portfolio Businesses, in Fiscal 2014.

 It is in the last  6 years that RBL has undergone from a traditional Bank into a new age bank.  It offers a comprehensive range of banking products and services for various segments like Large Corporations, Small and Medium Enterprises , Agricultural customers, Retail customers and Development Banking & Financial inclusion customers, Financial markets etc. As of March 31, 2016, RBL has 197 interconnected branches and 362 interconnected ATMs spread across 16 Indian states and union territories serving over 1.9 million customers.

The bank is owned by a clutch of private equity funds and financial institutions. It wants to raise Rs.1,100 crore to augment its capital base, besides allowing existing investors an exit. The Selling Shareholders are offering up to 16,909,628Equity Shares, by  Beacon India PE, GPE India, Gaja Capital, Capvent. While the IPO would lead to complete exit for Beacon India Private Equity Fund. The company that counts several PE Gaja Capital and Capvent shall be selling part of their shares.

Pre IPO Placement:

RBL Bank made a pre-IPO placement of 25,000,000 equity shares to the following investors at a price of Rs. 195 per equity shares: CDC Group PLC (1,600,000 equity shares), DVI Fund (Mauritius) Limited (3,690,231 equity shares) and Rimco (Mauritius) Limited (3,301,521 equity shares) on October 31, 2015  and to Asian Development Bank (14,350,000 equity shares), CDC Group PLC (680,682 equity shares) and DVI Fund (Mauritius) Limited (1,377,566 equity shares) on December 16, 2015.

Financials :

2012 2013 2014 2015 2016
Interest Earned 465.08 879.32 1351.6 1953.1 2744.3
Other Income 67.1 126.44 260.97 403.41 490.54
Total Income 532.2 1005.8 1612.6 2356.5 3234.9
Growth in income % 89.00% 60.00% 46.00% 37.00%
OP 113.94 159.61 178.7 360.12 542.41
OPM % 0.21 0.16 0.11 0.15 0.17
Profit  Before Tax 95.27 137.01 132.52 299.94 428.01
NP 65.1 92.85 92.67 207.18 292.48
NPM % 12.00% 9.23% 5.75% 8.79% 9.04%
EPS (Rs.) 3.03 4.21 3.63 7.23 9.6
Share Capital 214.95 252.93 272.04 293.45 324.73
Reserves 928.39 1352.7 1612.2 1936 2663.5
Net Worth 1143.3 1605.7 2013.7 2229.4 2988.2
RoNW (%) 6.00% 5.78% 4.60% 9.29% 9.79%
NAV 53.19 63.48 74.02 75.97 92.02
CAR % 23.14% 17.11% 14.64% 13.13% 12.94%
ROE % 7.28% 5.44% 9.58% 11.32%
ROA % 1.37% 1.05% 0.66% 1.02% 0.98%
NIM % 3.18% 2.68% 3.01% 2.96%
Dividend % 3 6 9 12 15

RBL Bank : Key Financial & Operational parameters :  (Figs in millions)

As of March 31, 2014 As of March 31, 2015 As of March 31, 2016
Number of branches 172 183 197
Total advances (Net) 98350.47 144498.26 212290.83
Total assets 181970.77 271036.49 391600.91
Total deposits 115986.02 170992.51 243486.51
CASA Ratio (%)(1) 20.43 18.46 18.64
Net Interest Margin (%) 2.68 3.01 2.96
Capital Adequacy Ratio (CAR) %(2) 14.64 13.13 12.94
Cost to Income Ratio% 70.35 62.48 58.59
Net profit 926.7 2071.75 2924.85
Gross NPA% 0.79 0.77 0.98
Net NPA% 0.31 0.27 0.59
Return on Asset% 0.66 1.02 0.98
Provision coverage% 65.73 68.28 55.87

Comparison with Peers

Related Post  : http://ipoandmore.com/2016/08/15/rbl-bank-comparison-with-peers/ )

 Industry P/E

  • Highest: 42
  • Lowest: 65
  • Average: 13

Assessment:

  • RBL Bank Ltd (“RBL”) is one of the fastest growing Private Sector Bank,having wide distribution network with presence through 197 interconnected branches and 362 interconnected ATMs in 16 States and Union Territories in India serving over1.9 million customers.
  • RBL Bank is first private sector bank IPO in over 10 years
  • RBL offers a comprehensive range of Banking Products and Services customized to cater to the needs of Large Corporations, Small and Medium Enterprises (“SMEs”), Agricultural customers, Retail customers and Development Banking & Financial inclusion (low income) customers.
  • RBL has maintained high CASA deposits.AS of 31st March 2016 the CASA deposits representing 18.46% of the total deposits consisted of savings deposits (7.22% of total) and current deposits (11.42% of total).
  • RBL Bank posted a superior CAGR growth of 51% from FY2012 to FY2016 in its Advances Book.
  • The Net Interest Margin has grown from 2.68% in FY 2014 to 2.96% in FY2016.
  • RBL has maintained a capital adequacy ratio of 12.94% in FY16.   RBL has maintained high CASA deposits. AS of 31st March 2016 the CASA deposits representing 18.46% of the total deposits consisted of savings deposits (7.22% of total) and current deposits (11.42% of total).
  • Deposits have also grown from Rs 4,739 crore in FYE2012 to Rs 24,349 crore in FYE2016, showing a robust growth.
  • The Gross and Net NPA stands at a reasonable level of 0.98% and 0.59% respectively for the year ended 2016
  • Bank aims to Maintain High Market Share In Micro Finance Space & Will Continue To Expand Geographically
  • The bank has issued preferential shares to the members violating SEBI norms. It paid over Rs 47 lakhs to SEBI as penalty recently
  • This Bank has some concentration of advances.  Rs. 4635 crore representing 14% of its advances has been given to only 20 parties and if  something goes wrong, it can severely affect banks profits for next few years
  • Over the last few years, well known global and Indian equity and development funds have invested substantial amount in the bank which includes the likes of  Asian Development Bank (ADB) , UK government’s development finance arm CDC Group Plc,, Fearing Capital , Samara Capital, Beacon Capital, Cartica Capital ,Gaja Capital, Norwest Venture Partners, HDFC, Ascent Capital, Aditya Birla Private Equity, IDFC’s Spice Fund, TVS Shriram, ICICI’s Emerging India Fund
  • FIIs & local institutions like HDFC FIIs and above all HDFC together hold more than 40% of the banks equity which is an expression of faith in its growth potential.
  • RBL bank is not owned by any group and is managed professionally and managements seems to have a good track record. Mr Vishwavir Ahuja the Managing Director and CEO of the Bank, has multi-decade  experience in banking sector and was as earlier  Managing Director and Country Executive Officer of Bank of America for the Indian sub-continent.
  • RBL Bank is likely to be a consistent performer and even as the IPO pricing is bit stiff, the IPO represents good investment opportunity both for those looking for short term gains & perhaps more for those with a medium to long term perspective in view of its good growth track record.

Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.

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