CSB Bank

CSB Bank IPO intends to raise about Rs 410 crore billion by fresh sale of shares ( ~24 crore) and balance being offer for sale (19.78mn shares), at a price range of Rs193-195 by existing investors like HDFC Life, ICICI Lombard, Icici Pru Life, Federal Bank etc.). CSB Bank Ltd, formerly known as Catholic Syrian Bank, is controlled by Canadian billionaire Prem Watsa (Fairfax).

CSB Bank IPO Details

Issue PeriodNov 22 – Nov 26, 2019
 Issue Closes On: Tuesday, 
Anchor Investor Bidding Nov 21, 2019
Issue DetailsFresh Issue Rs.24 Cr
 + Offer for Sale of upto 19,778,298 Equity Shares
Issue Size (Rs. Cr)Rs.409.68 Cr
Price BandRs.193 – 195
Bid Lot75 Equity Shares 
Issue Structure : 
QIB75% of the offer 
NIB15% of the offer
Retail10% of offer- 2,102,182 shares- Rs.40.97 Cr
BRLMsAxis Capital, IIFL Securities
RegistrarLink Intime India Pvt Ltd

About CSB Bank

  • CSB Bank, earlier The Catholic Syrian Bank, is one of the oldest private sector banks in India.
  • It has strong base in the state of Kerala along and good presence in Tamil Nadu, Karnataka, and Maharashtra .
  • CSB Bank has an overall customer base of 1.3 million end September 2019.
  • It offers a wide range of products and services with particular focus on SME, retail, and NRI customers.
  • The bank has a network of 412 branches and 290 ATMs spread across 16 states and four union territories end September 2019, in addition to various alternate channels such as micro ATMs, debit cards, internet banking, mobile banking, point of sale services and UPI. The bank is primarily focused in the states of Kerala and Tamil Nadu.

CSB Bank : Financials

 30sep19201920182017
Deposits15,509.8215,123.8714,690.6514,911.56
Advances11,402.8310,905.489,685.258,271.59
Interest Earned732.31,347.521,296.811,336.30
EBITDA 113.5834.9694.96171.7
EBITDA (%)15.51%2.59%7.32%12.85%
Profit Before Tax68.93-97.61-194.89-100.44
Profit after Tax44.27-65.69-127.09-57.99
Net Interest Margin (%)3.43%2.80%2.57%2.11%
Gross NPA (%)2.86%4.87%7.89%7.25%
Net NPA (%)1.96%2.27%2.87%4.12%
Equity Share Capital172.2885.9781.0181.01
Reserves as stated1,363.71236.68272.63465.13
Net worth1,535.99974353.64546.15
EPS (Rs.) 3.86-7.9-15.7-7.66
RoNW (%)2.88-6.74-35.94-10.62
Net Asset Value (Rs.)89.1973.5443.6867.46
Face Value10
IPO Price195
Post Issue Equity in cr.173.46
EPS (Rs.) Annualized5.1
PE38.2
P/BV2.2
Marketcap3382.47

As on 30th Sept 2019, CSB Bank’s CASA ratio stands at ~28%, net NPA at 1.96%. The net interest margin (NIM) stands at 3.43%.

CSB Bank IPO: Assessment

  • CSB Bank is primarily focused in the states of Kerala and Tamil Nadu.
  • CSB Bank IPO is primarily to meet the RBI’s requirement of listing the bank.
  • The promoters Fairfax (FIHM) had done recent warrant conversion at Rs140/ share against present offering @Rs. 195 in IPO.
  • The sale of share is by investors like existing investors like HDFC Life, ICICI Lombard, Icici Pru Life, Federal Bank etc. (total 26 investors)
  • CSB bank has Strong channel network and is trusted brand in South India. Its Retail offering are driven by strong gold loan portfolio
  • There is no sale by promoters. Post IPO, the promoter will hold ~50% stake in the bank which shall be progressively reduced in 15 years i.e. to 40% in 5 years, 30% in 10 years and 15% in 15 years in line with RBI regulation.
  • CSB Bank past has not much to speak out as the bank has reported losses in each of the last 3 years along with high NPAs.
  • CSB Bank’s peers like Federal Bank, DCB Bank, City Union Bank are available at much lower valuations.
  • CSB IPO looks to be quite aggressively priced.
  • The issue is very small with only 10% reserved for small investors. With good returns made by investors in IRCTC & little activity in primary market in the recent past, CSB Bank IPO should get good response.
  • CSB Bank IPO is seeing good demand in the grey market at present with GMP of about Rs. 75. This does not seem to be justified & there is no guarantee that it will sustain. The only consolation is with a marquee investor like Fairfax, it can stay in lime light.
  • I am likely to apply for CSB Bank IPO only from the point of Listing gains. Chances of getting an allotment may be poor.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.