RBL Bank, earlier known as Ratnakar Bank, hit the primary markets with its Rs 1,200 crore initial public offer today. Priced in a band of Rs 224-225, RBL Bank's IPO can be subscribed in lot sizes of 65. The IPO will close on August 23.
Here are 10 things to know before you invest in RBL Bank IPO:
1) RBL Bank is issuing 3.7 crore fresh equity shares to raise Rs 832.5 crore. Existing investors are selling (offer for sale) 1.69 crore shares to raise Rs 383 crore.
2) RBL Bank will use the IPO proceeds to increase its tier-1 capital base to meet future capital requirement.
3) Kolhapur-based RBL Bank started its operation in 1943 in Maharashtra. Most of its growth came in last six years after a new management took over in 2010. As of March, 2016, RBL Bank had a network of 197 branches and 362 ATMs. Around 50 per cent of its branches are restricted to Maharashtra only.
4) RBL Bank had reported a net profit of Rs 296 crore for FY16 up from Rs 66 crore profit in FY12. Its net interest income, or the difference between interest earned on advances and paid on deposits, grew from Rs 187 crore in FY12 to Rs 819 crore in FY16.
5) 39 per cent of RBL Bank's loan book is exposed to corporates. The private lender had bought the credit card business of Royal Bank of Scotland (RBS) and has been expanding it with new retail products, which account for 17 per cent of its total advances. High yielding microfinance loans account for 15 per cent of its loan book.
6) RBL Bank's advances have grown at a CAGR (compound average growth rate) of 51 per cent between FY12 and FY16 to Rs 21,229 crore. Its deposits have also grown at a CAGR of 51 per cent over FY12-FY16 to Rs 24,349 crore. However, low-cost CASA deposits are only 18 per cent, which have impacted RBL Bank's net interest margin. The lender's NIM in FY16 stood at 2.5 per cent, lower than other private sector peers.
7) RBL Bank's gross non-performing assets increased from 0.77 per cent in FY15 to 0.98 per cent in FY16. This was the period when bad loans witnessed a huge surge on account of Reserve Bank mandated asset quality review. RBL Bank's gross non-performing assets, as a percentage of total advances, stood at 0.98 per cent as of March 2016. This is next to Yes Bank and IndusInd Bank only. Its net-NPA was at 0.59 per cent as of March 2016.
8) RBL Bank's cost to income ratio at 58 per cent for FY16 is relatively higher as compared to other private banks. Its cost to income ratio, which hit a high of 70 per cent in FY14, has been coming down. Vishwavir Ahuja, MD and CEO at RBL Bank, told NDTV Profit that cost ratios rose because of investments done on expanding the bank's infrastructure during last two years. Cost to income ratios are likely to come down in the coming quarters, he added. (Watch)
9) RBL shares are valued at 24.6 times their FY16 earnings per shares (EPS) of Rs 9.1 and 2.6 times their adjusted book value of Rs 88.2, which is comfortable as compared to other mid-sized private sector banks, according to Angel Broking. The brokerage has a "subscribe" rating on the issue. AUM Capital also put a "subscribe" rating, citing RBL Bank's healthy asset quality, improving cost/income ratio and strong management.
10) Top management exits and concerns of slowdown in growth amid rising balance sheet are some of the challenges that could hit RBL Bank, analysts added.
RBL Bank, earlier known as Ratnakar Bank, hit the primary markets with its Rs 1,200 crore initial public offer today. Priced in a band of Rs 224-225, RBL Bank's IPO can be subscribed in lot sizes of 65. The IPO will close on August 23.
Here are 10 things to know before you invest in RBL Bank IPO:
1) RBL Bank is issuing 3.7 crore fresh equity shares to raise Rs 832.5 crore. Existing investors are selling (offer for sale) 1.69 crore shares to raise Rs 383 crore.
2) RBL Bank will use the IPO proceeds to increase its tier-1 capital base to meet future capital requirement.
3) Kolhapur-based RBL Bank started its operation in 1943 in Maharashtra. Most of its growth came in last six years after a new management took over in 2010. As of March, 2016, RBL Bank had a network of 197 branches and 362 ATMs. Around 50 per cent of its branches are restricted to Maharashtra only.
4) RBL Bank had reported a net profit of Rs 296 crore for FY16 up from Rs 66 crore profit in FY12. Its net interest income, or the difference between interest earned on advances and paid on deposits, grew from Rs 187 crore in FY12 to Rs 819 crore in FY16.
5) 39 per cent of RBL Bank's loan book is exposed to corporates. The private lender had bought the credit card business of Royal Bank of Scotland (RBS) and has been expanding it with new retail products, which account for 17 per cent of its total advances. High yielding microfinance loans account for 15 per cent of its loan book.
6) RBL Bank's advances have grown at a CAGR (compound average growth rate) of 51 per cent between FY12 and FY16 to Rs 21,229 crore. Its deposits have also grown at a CAGR of 51 per cent over FY12-FY16 to Rs 24,349 crore. However, low-cost CASA deposits are only 18 per cent, which have impacted RBL Bank's net interest margin. The lender's NIM in FY16 stood at 2.5 per cent, lower than other private sector peers.
7) RBL Bank's gross non-performing assets increased from 0.77 per cent in FY15 to 0.98 per cent in FY16. This was the period when bad loans witnessed a huge surge on account of Reserve Bank mandated asset quality review. RBL Bank's gross non-performing assets, as a percentage of total advances, stood at 0.98 per cent as of March 2016. This is next to Yes Bank and IndusInd Bank only. Its net-NPA was at 0.59 per cent as of March 2016.
8) RBL Bank's cost to income ratio at 58 per cent for FY16 is relatively higher as compared to other private banks. Its cost to income ratio, which hit a high of 70 per cent in FY14, has been coming down. Vishwavir Ahuja, MD and CEO at RBL Bank, told NDTV Profit that cost ratios rose because of investments done on expanding the bank's infrastructure during last two years. Cost to income ratios are likely to come down in the coming quarters, he added. (Watch)
9) RBL shares are valued at 24.6 times their FY16 earnings per shares (EPS) of Rs 9.1 and 2.6 times their adjusted book value of Rs 88.2, which is comfortable as compared to other mid-sized private sector banks, according to Angel Broking. The brokerage has a "subscribe" rating on the issue. AUM Capital also put a "subscribe" rating, citing RBL Bank's healthy asset quality, improving cost/income ratio and strong management.
10) Top management exits and concerns of slowdown in growth amid rising balance sheet are some of the challenges that could hit RBL Bank, analysts added.
RBL Bank, earlier known as Ratnakar Bank, hit the primary markets with its Rs 1,200 crore initial public offer today. Priced in a band of Rs 224-225, RBL Bank's IPO can be subscribed in lot sizes of 65. The IPO will close on August 23.
Here are 10 things to know before you invest in RBL Bank IPO:
1) RBL Bank is issuing 3.7 crore fresh equity shares to raise Rs 832.5 crore. Existing investors are selling (offer for sale) 1.69 crore shares to raise Rs 383 crore.
2) RBL Bank will use the IPO proceeds to increase its tier-1 capital base to meet future capital requirement.
3) Kolhapur-based RBL Bank started its operation in 1943 in Maharashtra. Most of its growth came in last six years after a new management took over in 2010. As of March, 2016, RBL Bank had a network of 197 branches and 362 ATMs. Around 50 per cent of its branches are restricted to Maharashtra only.
4) RBL Bank had reported a net profit of Rs 296 crore for FY16 up from Rs 66 crore profit in FY12. Its net interest income, or the difference between interest earned on advances and paid on deposits, grew from Rs 187 crore in FY12 to Rs 819 crore in FY16.
5) 39 per cent of RBL Bank's loan book is exposed to corporates. The private lender had bought the credit card business of Royal Bank of Scotland (RBS) and has been expanding it with new retail products, which account for 17 per cent of its total advances. High yielding microfinance loans account for 15 per cent of its loan book.
6) RBL Bank's advances have grown at a CAGR (compound average growth rate) of 51 per cent between FY12 and FY16 to Rs 21,229 crore. Its deposits have also grown at a CAGR of 51 per cent over FY12-FY16 to Rs 24,349 crore. However, low-cost CASA deposits are only 18 per cent, which have impacted RBL Bank's net interest margin. The lender's NIM in FY16 stood at 2.5 per cent, lower than other private sector peers.
7) RBL Bank's gross non-performing assets increased from 0.77 per cent in FY15 to 0.98 per cent in FY16. This was the period when bad loans witnessed a huge surge on account of Reserve Bank mandated asset quality review. RBL Bank's gross non-performing assets, as a percentage of total advances, stood at 0.98 per cent as of March 2016. This is next to Yes Bank and IndusInd Bank only. Its net-NPA was at 0.59 per cent as of March 2016.
8) RBL Bank's cost to income ratio at 58 per cent for FY16 is relatively higher as compared to other private banks. Its cost to income ratio, which hit a high of 70 per cent in FY14, has been coming down. Vishwavir Ahuja, MD and CEO at RBL Bank, told NDTV Profit that cost ratios rose because of investments done on expanding the bank's infrastructure during last two years. Cost to income ratios are likely to come down in the coming quarters, he added. (Watch)
9) RBL shares are valued at 24.6 times their FY16 earnings per shares (EPS) of Rs 9.1 and 2.6 times their adjusted book value of Rs 88.2, which is comfortable as compared to other mid-sized private sector banks, according to Angel Broking. The brokerage has a "subscribe" rating on the issue. AUM Capital also put a "subscribe" rating, citing RBL Bank's healthy asset quality, improving cost/income ratio and strong management.
10) Top management exits and concerns of slowdown in growth amid rising balance sheet are some of the challenges that could hit RBL Bank, analysts added.
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