Bandhan Bank
Bandhan Bank IPO comprises of fresh issue worth of  Rs. 3,662cr and OFS worth Rs. 810 cr.  International Finance Corporation and IFC FIG Investment Company are making a partial exit through the OFS. 

Bandhan Bank IPO Details:
Issue PeriodThur, March 15, 2018- Mon, March 19, 2018
Issue DetailsFresh Issue  of 97,663,910 Equity Shares
 + Offer for Sale of 21,616,584 Equity Shares
Issue Size (No. of Shares)15,436,144  Equity Shares
Issue Size (Rs. Cr)4473 crore
Price BandRs.370 – 375
Bid Lot40 Equity Shares and multiple thereof
Issue Structure : 
QIB50% of the offer
NIB15% of the offer 
Retail17,892,075 Equity Shares -671Cr
Appls Required for 1x10,43,704.00
BRLMsAxis Capital, Kotak Mahindra Capital, Goldman Sach, JM Financial, J P Morgan
RegistrarKarvy Computershare 
About Bandhan Bank
  • Bandhan Bank Ltd has its roots in 2001 when an non government organisation (NGO) named Bandhan Konnagar was formed to provide microfinance services to socially and economically disadvantaged women in rural West Bengal.
  • Incorporated on 23 December 2014, Bandhan Bank Limited (“Bandhan”) a commercial bank focused on serving under banked and under penetrated markets in India. Bandhan  offers a variety of asset and liability products and services designed for micro banking and general banking, as well as other banking products and services to generate non-interest income.
  • Bandhan Bank’s has 887 bank branches, 430 ATMs serving 21 lakh customers)and 2,633 doorstep service centres (DSCs) serving 99 lakh micro
  • Bandhan Bank is concentrated in East and North East India, with West Bengal, Assam and Bihar – together accounting for 57% of branches and DSCs.
Bandhan Bank: Financials
Rs. In Crore
 Fy18(9m)Fy17(9m)FY17FY16
Interest Earned3,451.702,830.373,908.711,581.36
Revenue Growth (%)21.95%147.17%
Deposits25,293.9619,463.3123,228.6612,088.75
Advances Net22,930.7516,222.5616,839.0812,437.55
Profit Before Tax1,461.181,210.831,704.47413.51
Profit after Tax 957.7789.541,111.95275.25
NPM  %27.75%27.90%28.45%17.41%
Share Capital1,095.141,095.141,095.141,095.14
Reserves4,309.013,028.903,351.312,239.36
Net worth5,404.154,124.044,446.463,334.50
RONW(%)17.72%^19.14%^25.01%8.25%
NIM9.86%10.34%10.44%11.02%
ROE25.55%27.88%28.51%15.96%
ROA4.07%4.39%4.47%3.07%
EPS (Rs.)8.747.2110.153.4
Net Asset Value (Rs.)49.3537.6640.630.45
NAV Post Issue75.6   
Face Value10
IPO Price375
Post Issue Equity1192.8
Price/BV(post Issue)4.96
EPS (Post IPO)10.71
PE (post IPO) 35.03
Market Cap44730.00crore
Market cap / Sales11.85

Bandhan Bank: Other Ratios
Ratio/YearFY16FY179MFY18
NIMS (Net interest margin)4.911.410.7
ROA (return on Assets)1.44.44.3
ROE (Return on Equity)14.428.626.8
Cost to Income573635.4
CASA Ratio222933
Gross NPAs0.20.51.7
Net NPAs0.10.40.8
CAR (Capital Adequacy Ratio)2926.424.9
Rationale for Investment
  • Bank’s strength lies in micro finance, including a network of 2,633 Doorstep Service Centers (“DSCs”) and 9.86 million micro loan customers as of December 31, 2017.
  • Bandhan Bank launched its general banking business on August 23, 2015 by opening a Greenfield network of 501 bank branches and 50 automated teller machines (“ATMs”), which as of December 31, 2017 has grown to 887 bank branches and 430 ATMs, together serving over 2.13 million general banking
    customers.
  • Bandhan Banks distribution network is particularly strong in East and Northeast India, with West Bengal, Assam and Bihar together accounting for 56.37% and 57.58% of its branches and DSCs, respectively, 
  • Bandhan Bank has built a strong base of Current Account and Savings
    Account deposits, which together stood at Rs.8,401.85 crore as of December
    31, 2017, a CASA ratio of 33.22%.
  • Bandhan Bank retail-to-total deposit ratio stood at 85.07% as on December 31,2017
  • Bandhan Bank has developed an 1Extensive, Low Cost Distribution Network
 
Risks 
  • Bandhan Bank’s operations involve transactions with high risk borrowers i.e. in unsecured Loan segment.
  •  Bandhan Bank has limited historical track record
  • Maintaining this profitability may be difficult as the Bank scales up its operations
Bandhan Bank IPO: Assessment
  • Bandhan Bank has built a strong base of Current Account and Savings Account deposits, which together stood at Rs.8,401.85 crore and a CASA ratio of 33.22% as on as of December 31, 2017.
  • On post-issue equity, Bandhan Bank’s  P/E works out to be 35.0 times.
  • Post-issue book value of Bandhan Bank works out to be 4.9X 
  • Even as the issue may be leaving nothing at table for investors, Bandhan Bank bank has a unique business model and has so far done quite well.
  • Despite  stiff  valuations, I am likely to apply in Bandhan Bank IPO.
  • 19/3/18: 12:40 Hrs: Applied in Bandhan Bank IPO.
Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.