RBL Bank makes stellar debut; market cap crosses Rs11,000 crore
Stock of RBL Bank opened at Rs273.70 and touched a high and a low of Rs305 and Rs273.70, respectively
Mumbai: Shares of RBL Bank Ltd debuted at a premium of 33.02% on Wednesday, after the private sector lender received a strong response to its ₹ 1,211- crore initial public offering (IPO) last week.
The listing pegged the bank’s market capitalization at ₹ 11,068.38 crore, which is higher than that of 16 state-owned lenders and 10 private sector banks, including Bank of India, Indian Bank, Union Bank of India and DCB Bank Ltd.
RBL Bank shares closed 33.02% higher on BSE at ₹ 299.30 apiece compared with its issue price of ₹ 225. The stock opened at ₹ 273.70, and touched a high and a low of ₹ 305 and ₹ 273.70, respectively.
The benchmark Sensex index closed 0.39% higher at 28,452.17 points on Wednesday.
“The capital raised is to support future growth and business, to meet capital adequacy ratio of Basel III norms," said Vishwavir Ahuja, managing director and chief executive of RBL Bank.
“We believe in partnerships, which is the key factor that differentiates us from others," Ahuja told reporters at the press conference held for listing the bank’s shares. RBL Bank is the first private sector lender to go public in a decade, leading to a lot of attention from investors.
“This is the first private sector bank IPO in a long time. Private sector banks are gaining market share in India, where a huge population is still unbanked. PSU (public sector unit) banks have their capital limitations and efficiency hurdles. So, this trend of private sector banks gaining market share is going to continue for some time to come," said Gaurav Dua,head (research) at Sharekhan Ltd.
“So, when you have a private sector bank hitting the market after long, it is bound to garner huge response," added Dua.
RBL Bank’s issue drew subscriptions that were 69.62 times the issue size—excluding the anchor allotment—registering the highest overall subscription among IPOs of private sector banks.
DCB Bank’s IPO in October 2006 was subscribed 35 times, while Yes Bank Ltd’s IPO in June 2005 was subscribed 29.13 times, according to data by Capitaline, a corporate data provider.
Also Read: RBL Bank IPO closes, subscribed 69.57 times
“The bank will give decent growth numbers compared to other players in the industry on the back of strong management. We expect share price to stabilize around ₹ 325 in the immediate future," said Siddharth Purohit, senior research analyst at Angel Broking Pvt. Ltd.
The bank aims to raise its capital base for growth and comply with incremental capital needs under the Basel-III norms as well as the Reserve Bank of India’s norms.
In 2015-16, RBL Bank reported a revenue of ₹ 3,234.85 crore, up from ₹ 2,356.49 crore a year ago, and a profit of ₹ 296.8 crore, up from ₹ 208.45 crore a year ago.
The bank’s income grew at an annual rate of 50% compounded over the last five years. Its return on equity has also doubled in the past five years, according to data available in the issue documents. RBL Bank has 197 branches and 362 ATMs across 16 states. Its shares are valued at 2.2 times price-to-book on historical value.
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