CSB Bank’s initial public offering (IPO) saw fierce competition from all investor classes and it was subscribed 86.92 times on Tuesday’s final day of issue. Retail quota has been subscribed 43 times as it offers 9,27,59,250 shares against 21,00,906.
The tranche of non-institutional investors saw demand 164.68 times as they offered for 126.96.36.1995 shares compared with 31.51.360 offers. Meanwhile, 62.18 subscribed to the section of Qualified Institutional Investors.
Overall, investors are bidding against 1,15,54,987 on bid for 1,00,43,98,500 shares. Due to the robust response from retail investors, the problem was subscribed 4.28 times till Monday.
CSB Bank, headquartered in Kerala, is one of India’s oldest bank in the private sector. After many years of struggle due to lack of assets, the bank is steadily emerging from trouble assisted by Fairfax group fund infusion, analysts stated.
At the upper limit of the price band Rs 193-195, the issue is valued on H1FY20, post issue diluted basis, at 2.4 times its price to book value.
Following the acquisition by the Fairfax group, the reorganized operating strategy helped the company report profits in H1FY20. The company is fixated on enhancing profitability and continuing growth. We think that, given the strong support as well as profitability of the promoter, investors can subscribe to the IPO for-profit listing, Motilal Oswal Financial Services said. Hem Securities also supported the issue with a ‘ Subscribe ‘ score. It sees the likelihood of listing gains due to the robust and granular deposit base of CSB as well as its competent and seasoned management with a strong and independent board that instills confidence in potential bank prospects.
On the other hand, Angel Broking is cautious on the IPO as he assumes that calling for valuations is costly given investment concerns.
The bank’s exposure to three states, Kerala, Tamil Nadu and Karnataka, is 83 percent. It has 412 branches across 16 states and four territories with a base of 3,001 employees as of FY19.