CSB Bank IPO or initial public offering opened for subscription on Friday. The three-day share sale under the CSB Bank IPO opened for subscription on Friday and will close on November 26. CSB Bank is selling shares of face value of Rs 10 each in the price band of Rs 193-195 per equity share. The CSB Bank IPO size is about Rs 410 crore, including fresh sale of Rs 24 crore and balance being OFS by existing investors. The shares will be allotted on December 2, 2019 and listed on both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on December 4. CSB, one of the oldest private sector banks in India, has a customer base of nearly 13 lakh people (as on March 31, 2019).
CSB Bank IPO: Here is all you need to know about CSB Bank three-day share sale:
CSB Bank's key strategic-investor-cum promoter Fairfax India Holdings - Mauritius that holds a 50.1 per cent stake remains committed and is not tendering any shares in the IPO, a Mumbai-based brokerage firm Emkay said in a note to its clients.
CSB is going for the IPO mainly to meet the RBI's requirement of listing the bank, Emkay said. CSB in its old avatar as 'Catholic Syrian Bank' was plagued with issues relating to unions, weak asset quality and sub-par capital position, pushing the bank to near-PCA like restrictions by the RBI. However, it has seen a major transformation after the appointment of incumbent MD and CEO CV Rajendran, a veteran banker, who also facilitated the onboarding of FIHM (Fairfax) as an investor-cum promoter, calling for a policy relaxation from the RBI.
Current management has done the course correction in the bank by reducing the influence of unions/a religious institution, retiring unproductive staff via voluntary retirement scheme and cutting the NPAs by write-offs, and has now embarked upon the next leg of journey, Emkay report added.
CSB Bank IPO: CSB Bank Asset Quality:
The bank has seen steady decline in gross non-performing assets (GNPA) ratio to 2.9 per cent from a high of 7.9 per cent in financial year 2018, mainly due to heavy write-offs. Within the corporate book, it has consciously increased the share of A and above portfolio to 77 per cent from 35 per cent in financial year 2017 to improve portfolio quality. Exposure to NBFCs/HFCs remains sizeable, but the bank claims that bulk of it is to better-rated corporates barring a few, Emkay noted in its report.
CSB Bank IPO: CSB Bank Outlook and Valuations:
The bank has done reasonably well in its first phase of transformation over the past 2-3 years, reducing the influence of unions and religious institution, rationalizing branches/employees and turning it from a capital-starved bank into a capital-excess bank after onboarding investor-cum-promoter Fairfax, Emkay said.
"However, we believe that the second phase of transformational journey to take the bank to new growth phase will be challenging, particularly given current stressed scenario and rising competitive intensity, where even established Federal Bank and promising banks like RBL Bank have slipped," Emkay added.