CSB Bank IPO: MoneyWorks4me Opinion

CSB Bank IPO Details:
Issue Open: Nov 22nd, 2019 — Nov 26th, 2019
Issue Type: Book Built Issue IPO
Issue Size: 21,021,821 shares (Upto ₹409.68 Cr)
Face Value: ₹10 Per Equity Share
Issue Price: ₹193 to ₹195 Per Equity Share
Market Lot: 75 Shares
Minimum Order Quantity: 75 Shares

Proceeds of the offer

Proceeds of the offer will be going to existing shareholders. The company gets no funds from the IPO.

About the CSB Bank

CSB Bank (formerly The Catholic Syrian Bank Limited) offers a wide range of products and services to SME, Retail, and NRI customers.

It has three principal areas of lending, viz., (i) SME banking, (ii) retail banking, (iii) wholesale banking. The bank delivers its products and services primarily through 412 branches and alternate channels.

The bank was recently acquired by Fairfax, a renowned firm based in Canada managed by Prem Watsa who has various holdings in India like IIFL, Thomas Cook, Fairchem, Quess Corp and Quantum Mutual Funds, etc.

CSB Bank Financials

If we observe CSB Bank’s financials, it has never earned ROE in the past 10 years.

CASA has improved from ~18% in 2013 to 28% in 2019 albeit not enough to sustain the low cost of funds. NIM% is inching upwards from just 1.65% in Mar’2010 to 2.82% in Mar’19.

CSB Bank IPO — MoneyWorks4me Opinion

As fundamental investors, we prefer to own firms that have exhibited the ability to earn superior ROE, consistent growth and scaling up. Even if we are late to the party, the execution track record helps to achieve twin benefits; not only it significantly reduces our risk to lose money but also gives good upside potential.

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