JainMatrix Investments has come up with its research report on RBL Bank IPO. Analysts at the Bangalore-based research house have recommended investors to BUY with a 2 year holding perspective. The report, available down the text, takes cognizance of the fact that RBL is focusing on niche high growth areas such as microfinance, agro and small business. In Bangalore, it has a start-up focused branch for new entrepreneurs. RBL has focused sharply on the rural microfinance sector – the greatest potential sector within Indian BFSI – which is a sustainable success strategy, says the report in its recommendation.
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The IPO of Kolhapur-based bank is priced at INR224-225 per share and currently commands a premium of INR40-50 per share in the grey market. Here are the main points of the research conducted by JainMatrix Investments. Please scroll down for the full report.
Overview: RBL is a Kolhapur (Mah.) based private sector, universal, full service bank.
Total Income in FY16 was Rs 3,235 cr. Topline and PAT grew 57% and 45.6% CAGR over 5 years.
RBL occupies several valuable niches such as (50%) Maharashtra operations; agriculture, rural and microfinance focus; a startup focus in Bangalore.
The strategy of high growth, aggressive deposit, loan rates and low margins is sustainable.
With a new management since 2010, RBL has seen a Grand Revival and a good business trajectory.
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Why BUY: 1) RBL has a good record of business so far in terms of growth, nimble business focus, and differentiation. 2) In terms of valuations, RBL has priced the shares moderately. 3) High quality institutional & PE investors and good management.
Key risks: Rural slowdown in Maharashtra and intensified competition in BFSI sector.
Retail Investors can BUY this IPO with a 2 year holding perspective.
Valuations are P/E 25.9 times and P/B 2.45 times at the upper end of price band.
The Grey Market Premium for this IPO is Rs 40-50 (on 17th Aug).
To check the latest subscription status and to see what our community has to say about pricing and recommendation, check this our discussion page on RBL Bank IPO.