Kerala-based CSB Bank Ltd’s Rs 410 crore initial public offering (IPO) opens on Friday, i.e. November 22. Investors can submit subscription bids till November 26. The price band has been fixed at Rs 193-195 per share. Bids can be made for a minimum lot of 75 equity shares and in multiples of 75 equity shares thereafter. The bank, backed by Canadian billionaire’s Fairfax India through FIH Mauritius Investments Ltd (FIHM), will finalise basis of allotment on 2 December and will credit equity shares to shareholders’ demat accounts on December 3.
If you are considering to invest money in the IPO, you must know what some of the brokerage houses are saying about the issue:
Subscribe to CSB Bank: ICICI direct
CSB’s performance has not been encouraging in the past with rise in NPA (non-performing asset) level. However, new promoter and strong management brings capital and execution strength on the table which bodes well for future growth as well as earnings. Therefore, we assign a ‘subscribe’ recommendation to the stock. Further, at the IPO price band of Rs 193-195, the stock is available at a P/BV of approximately 2.2x at the upper band on H1 FY20 basis.
Avoid CSB Bank: Choice Equity Broking
While the operations expanded to 16 states and four union territories, business of the bank is much skewed towards Kerala… improvement in business performance has been mainly driven by gold loans while the SME (small and medium enterprises) book witnessed contraction…At 2.4x, CSB Bank is valued premium to Karur Vysya Bank (1.0x), Karnataka Bank (0.5x), Federal bank (1.4x). Considering the above factors, we assign ‘Avoid’ rating to the issue.
Subscribe to CSB Bank: Hem Securities
CSB Bank has shown losses consecutively from FY17 to FY19, however it has turned around on bottom line level in H1FY20. Also, the bank has strong channel network and is a trusted brand in South India with strong capital base post FIHM’s investment in bank… CSB with its stable and granular deposit base has professional and experienced management with strong and independent board which infuse optimism in future prospects of the bank. Hence we recommend ‘subscribe’ on the issue for listing as well as long-term gains.
Subscribe to CSB Bank: Mehta Equities
We believe CSB Bank’s IPO provides good scope of growth as well as a favourable investment opportunity focused in SME and gold loan portfolio for investors. CSB has posted turnaround results in the first six months of FY20 and has improved its operational and financial performance compared to its historical performance.
Considering turnaround performance and focusing on implementation of strategic changes in business model to function efficiently as a full-service new age private sector bank backed by FIHM, the promoter, we stand positive on the investment rationale and recommend investors to ‘subscribe’ to the issue for listing gains as well as short-term gains.
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