CSB Bank IPO Review

CSB Bank Limited Listing on 4th Dec 2019. NSE Code - CSBBANK, BSE Code - 542867, ISIN No - INE679A01013.

Expected listing price - 265, Max 295.

All the best for all the investors who received shares in IPO.

Can I apply CSB Bank IPO Tmr?

You can apply up to 2 pm on 26 Nov 2019(Tuesday) from net banking (ASBA) and maybe up to 4 pm on 26 Nov 2019 in the banks where they are accepting the physical applications (please check-up the respective cut-off timings).

GMP for CSB IPO is 70-75, Apply ....

Can I apply 13 lots of CSB Bank in Retail Category, Please advise?

Yes, You can apply 13 lots (975 Shares), but keep in mind that on day one retail category is already subscribed 5.6x, so it''s advised to apply only one lot of 75 shares.

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Can we apply CSB IPO form bank?

Yes, You can apply via ASBA or Bank. When you are applying from Bank, you need to use the UPI payment method.

Can I apply 5 different CSB Bank IPO Demat applications through single SBI bank account net banking?

Yes, You can use ASBA to apply 5 different application through SBI and Axis Bank account. Not each application must be with a unique user (Demat account with different PAN Number).

From Moneycontrol. -
SBI Cards & Payment Services, the country's second-largest credit card provider, is all set to file its draft red herring prospectus (DRHP) early next week and move towards launching the first domestic initial public offer (IPO) by a pure-play credit card company. The Gurgaon-headquartered firm is a subsidiary of the State Bank of India and its IPO is all set to raise around Rs 9000 crore, making it the biggest listing yet in FY20.

Anchor Investor Update for CSB Bank IPO-
"OMERS " Canada''s largest defined pension plans got about 38% of the equity shares available for allocation under the Anchor Investor Portion of CSB.
The other anchor investors include Aditya Birla Sun Life Mutual Fund (MF), Axis MF, ICICI Prudential MF, Sundaram MF, SBI MF, Ashoka India opportunities Fund, Jupiter India Fund.

OMERS Administration Corporation (OAC Custody Account - SCV6) has emerged as the single-largest anchor investor in CSB Bank''s initial public offering (IPO), getting an allocation of 37.97 percent of the equity shares available for allocation under the Anchor Investor Portion.

CSB Bank IPO Updates
Anchors received a Good Response of 2.5X till 3 PM.
GMPs 80 Rs
HNIs are Now Participating in this
HNIs Book 61.5 CR

What is GMP for CSB IPO?

Current GMP for CSB Bank IPO 93-95

Estimated oversubscription:
QIB - 100
Retail 8-9 times
HNI - 260+

GMP of CSB IPO is 52-53
GMP of Ujjivan SFB IPO is about 8

Current GMP- 55 to 60 Expected listing gain per lot is around 4100

Latest Kostak Rate for CSB IPO - 4600 Rs @ 76/78 Rs Premium

Latest update on GMP Price

USFB IPO GMP 10-11
CSB Bank IPO GMP 75-77

CSB Bank Brokers Meet - Key takeaways

Capital adequacy at 22% has improved substantially post fair fax infusion.

Loan book has started to grow at 17-18%, this is helping in an increase in credit deposit ratio, which in turn is helping in better margins. Credit deposit ratio should continue to improve.

Current book mix - 33% is gold loan, 32% SME, 8% retail and 28% corporate.Going forward growth will be driven by gold, msme and retail.

A new msme team from a private bank is joining this month to drive msme growth. 2 wheeler and gold loans there is already a very competitive team in place.

NIM has improved to 3.4% from 2.1% in FY16, margins should continue to improve via a better credit deposit ratio, a better loan book mix (gold loan yields are 12.5% and have an upward bias, MSME yields also upwards of 12%, - both the business should be growth drivers for them with their mix improving sharply)

Deposits- Bank has cut rates this year and despite the cut seen a 98% renewal rate in retail term deposits, this should help contain cost of funds at low levels. CASA ratio stands at 28%, management intends to take this to over 40% in next few years.

Operating costs- In last 2 years, employee base has reduced from 3000 to 1900, additionally now the bank is out of the IBA wage agreements, almost all its employees are on CTC basis. Management has reduced employee cost significantly, and they target further reduction. Current average salary per employee is 11.5 lac, where as new employees are being appointed at 3.5-4 lac, it expects a material reduction in costs of wages in next few years.
Also currently bank has 260 branches which won''t be expanded in a big way, they will shut some branches and open new branches.

Cost Income ratio- FY19 cost income ratio was 102%, it included one time provisioning of 100 crore on account of VRS given to employees. Currently cost income ratio has improved to 66%, this should further see sharp improvement driven by higher income growth led by better margins and expansion in loan book, at the same time operating cost should be contained in account of continuous reduction in employee cost.

Asset Quality- currently GNPA is 2% with almost 80% Provision cover. All of the legacy problems have been more than addressed and no shocks is expected going ahead. In the new disbursement taken place in last 3 years, they have seen only one major NPA of 25 crore, and as such management is confident of asset quality of the new book. Credit costs are expected to be pretty controlled.

Promoter holding - Fairfax will own 49.7% stake post listing, it has to get this down to 40% in next 5 years, 30% in 10 years and 15% in next 15 years progressively.

Post heavy losses in FY18/19, CSB declares operating profit of 90 crore in H1FY20 and 44 crore of PAT. This implies 4.5% ROE.

Bank post issue Mcap is expected to be 3400 crore, it''s net worth is about 2000 crore currently implying a P/BV of 1.7x TTM.

View- Quite honestly the sort of turnaround that the bank has achieved in past 18 months is nothing short of phenomenal. Profitability of the bank should see massive improvement in next 2 years driven by higher loan growth, better book mix, high margins and low cost income ratio. Bank can deliver mid teens ROE from FY22, and hence can command a premium to peers. Also CEO seems very confident on its ability to deliver better return ratios, management team quality is also very decent.

CSB has posted turnaround results in 6MFY20 and has improved its operational and financial performance. We believe the bank should do well with the recent capital raise and its strong risk management frameworks. On the valuation front, at the upper end of the price band, CSB is valued at a 2.31 P/BV and 25.31x P/E. Taking into account huge growth prospects and its comfortable asset quality stock looks attractive for investment. We give "SUBSCRIBE" rating in the stock for listing gains.

Long term - No view currently.