Arihant Capital has come out with its report on CSB Bank. The research firm has recommended to "Subscribe'' the IPO in its research report as on November 21, 2019
Arihant Capital's IPO report on CSB Bank
CSB (Formerly known as Catholic Syrian Bank) is one of the oldest private sector bank in India with a history of over 98 years, backed by marquee investor – Fairfax India through FIH Mauritius Investments Ltd (FIHM). The bank has a total customer base of 1.3 mn with 412 branches across India having significant presence in Kerala and Tamil Nadu. The bank offers wide range of products and services, with particular focus on SME & Retail, particularly Gold loans, and wholesale banking.
Valuation and Outlook
At the upper price band of Rs 195, the stock is offered at 2.2x P/BV (post issue), which we believe is at premium as compared to other small private sector banks. However, in H1FY20 the bank has shown strong performance, which somewhat justifies its premium valuation. The bank has good track record of operations in south India with high focus on gold loans. The key positive factors for CSB are good promoter background, adequately capitalized position; focus on CASA deposit and high yielding business areas like gold loans. The bank has also shown strong improvement in asset quality with controlled credit cost. We recommend investors to subscribe to the issue for a long term horizon. We have a three star rating on the issue.
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