SPA Research has come out with its report on Bandhan Bank IPO , The research firm has recommended to “ Subscribe ” the IPO in its research report as on March 15, 2018
Bandhan Bank Limited ( BBL) was incorporated on 23 December 2014 at Kolkata and began operations on August 23, 2015, when Bandhan Financial Services Limited (BFSL), their ultimate parent company, transferred its entire microfinance business to them and Bandhan simultaneously commenced general banking activities. Bandhan Konnagar was formed in 2001 as an NGO providing microfinance services to socially and economically disadvantaged women in rural West Bengal. BFSL started
its microfinance business in 2006 and the NGO transferred its microfinance business to BFSL in 2009 and thereby the entire microfinance business was undertaken by BFSL. By the time BFSL transferred its microfinance business to Bandhan, it was India's largest microfinance company by number of customers and size of loan portfolio.
BBL’s ability to improve its scale of operation along with profitability with every successive transition is admirable. It has evolved from an NGO to a MFI and now a universal bank. Their focus on serving the underserved, consistent track record of growing a quality asset and relentless focus on cost control has resulted in healthy return ratio of ~4% / ~25% ROA / ROE for 9M FY18. We expect higher opex cost and spreads to widen as itevolves into a universal bank from an MFI. At upper price band of INR 375, the issue is priced at 4.9x P/BV 9M FY18 post dilution. Considering the superior track record of the company (~42% CAGR since FY16, ~0.5% GNPA, ~38% CAR post dilution & 33% CASA), we believe the issue is fairly valued. However, deployment of the fresh proceeds in a similar way going ahead remains a key risk. We recommend SUBSCRIBE to the issue.
For all IPO stories, click here
Read More