ICICI Direct 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
ICICI Direct's IPO report on CSB Bank
CSB Bank (CSB) is one of the oldest private sector banks in India with a history of over 98 years and a strong base in Kerala along with a significant presence in Tamil Nadu and Karnataka. The bank is promoted by FIH Mauritius Investments Ltd (FIHM). FIHM is a wholly-owned subsidiary of Fairfax India Holdings Corporation. The bank offers a wide range of products and services to its customer base of 13 lakh (as on FY19) aided by 412 branches, with focus on SME, retail and NRI customers. As of September 30, 2019, CSB has advances of | 11298 crore. Geographically, the company has ~83% exposure towards three states viz. Kerala, Tamil Nadu and Karnataka. CSB has 412 branches across 16 states and four union territory with employee base of 3001 as of FY19. The bank has healthy CASA deposits of ~| 4372 crore with CASA ratio of 28.2% as of September 30, 2019.
Valuation and Outlook
CSB’s performance has not been encouraging in the past with rise in NPA 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 ~2.2x at the upper band on H1FY20 basis.
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