RBL Bank Ltd IPO (RBL Bank IPO)
Another first of its kind, after the first Small Finance Bank (SFB) Ujjivan got listed, RBL Bank Ltd. is the first private sector lender to go public in this financial year. RBL Bank Ltd. is coming with an initial public offer which will hit the primary market on 19 August 2016. The company aims to raise Rs. 1,100 Cr by offering shares at Rs. 224 – Rs. 225 per Equity Share.
RBL was incorporated as a regional bank in 14 June 1943 at Maharashtra. RBL has cultivated a customer-centric culture where they use their industry domain knowledge, experience and technology with the goal of satisfying the client’s complete banking needs. They offer 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.
They have been expanding their presence across India through a growing network of branches and ATMs and upgrading their traditional delivery channels with modern technology-enabled channels like phone banking, internet banking and mobile banking.
They had 183 interconnected branches and 348 interconnected ATMs spread across 13 Indian states and union territories serving over 1.3 million customers as of March 31, 2015.
They believe that their Bank now has:
• A quality management team and a pool of talented and dedicated employees.
• A strong operating platform built on the foundation of the above pillars.
• A significantly larger new customer base as well as expanded and stronger relationships with existing customers.
• A comprehensive product suite and an enhanced customer experience.
• A multi-channel distribution network including new branches, ATMs and mobile and internet platforms.
• A robust modern technology infrastructure; and a new brand identity, “RBL Bank”, backed by strong marketing and communication plans.
In 2014, they acquired certain Indian businesses of the Royal Bank of Scotland (“RBS”), including the RBS’s business banking, credit card and mortgage portfolio businesses which enable them to expand their scale of operations and geographic presence.
RBL’s business segments consist of:-
Corporate and Institutional Banking (C&IB):- C&IB business segment caters to the banking needs of enterprises, corporate entities and, particularly, large sized corporations
Commercial Banking (CB):- CB segment finances the business needs of SMEs (i.e., companies and firms)
Branch and Business Banking (BBB):- BBB is a new business segment established in 2015, which combined their previous retail branch banking business and business banking segments. As a combined segment, BBB focuses on individual accounts and business accounts and uses their branch network to service both.
Agribusiness Banking (AB):- AB segment services the customers involved in agriculture and allied activities. The objective of this segment is to capture the banking requirements across the entire agri-value chain and create a loyal customer base by offering a complete bouquet of products and services.
Development Banking and Financial Inclusion (DB&FI):- DB&FI segment provides financial services to developing and rural parts of India, which have generally not had access to financial products and services.
Treasury and Financial Markets operations: – treasury operation is their interface with the financial markets and consists primarily of advising corporate, institutional and commercial banking clients on domestic and cross-border transactions and risk management of exposures in relation to the clients’ balance sheets.
RBL’s Competitive Strengths:
• Client focused approach to business resulting in growing brand recognition
• Robust multi-channel distribution system
• Partnerships that expand reach in rural markets
• Growing net interest and non-interest income
• Risk management and balance sheet focus
• Modern and scalable information technology systems infrastructure
• Focus on operational quality and scalability
IPO Details :-
RBL Bank grew from INR 532.2 crore in FY2012 to INR 3,234.8 crore in FY2016, marking a CAGR of 57%. Profits in the same period jumped from INR65.1 crore to INR292.4 crore at a CAGR of 45.5%, in the last four years. For 2016, RBL Bank’s diluted EPS was INR9.43. At 225 per share. RBL Bank IPO is priced at a P/E ratio of 24 while the P/B (Price to book value) ratio is at 2.22. Compared to this, Kotak Mahindra is trading at P/E of around 38 and IndusInd bank is trading at 29.
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