Subscribe to RBL Bank IPO: Aditya BirlaRBL Bank Limited (RBL) is a 73 year old private sector bank based out of Maharashtra. As of FY16, it has operations across 16 states and union territories with 197 branches and 362 ATMs. It has 3871 employees (FY16) serving ~1.9 mn customers. The bank has been growing at a strong pace in the past 6 years post the transformational change in 2010 when the new management team took charge. Over past 6 years, RBL has invested significantly in building up a strong banking platform involving technology, human capital, network and risk management framework. Alongside, it has managed to grow advances at 50.5% CAGR over FY12-16. RBL offers a comprehensive range of banking products and services to cater to the needs of large corporates, SME, agricultural & retail customers and low income customer. This Issue comprises of fresh issue of 37 mn shares (@`225) and 17mn shares via OFS.Valuations fairly priced in short term:- At `225, RBL shall trade at 2.1x FY16 postissue ABV and PE of 27.8x FY16 EPS. We believe strong and steady growth alongwith improving proportion of retail mix justifies the rich valuation. Return ratios areslightly weak with RoA of 1% but it also leaves significant headroom for improvement if business is managed well. Listing gains shall be limited on account of relative premium valuations. Recommend investors to SUBSCRIBE the stock and hold for medium to long term perspective.
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