Bandhan Bank, despite being a former micro-finance players and considering the impact ofdemonetization, posted the lowest NPAs amongst scheduled commercial banks with a GNPA ratio of 0.5% in fiscal year 2017.
Bank's loan book grew 35% in fiscal year 2017, the highest amongst scheduled commercialbanks which is expected to increase considering the last quarter growth usually high. Additionally, since beginning operations bank has generated increasing non-interest incomeas a percentage of overall income, improving from 8.66% for March 2016 to 35.38% for thenine months ended December 31, 2017. This increase in non-interest income has helped toimprove margins and returns. Further, it aims to garner more non-interest income to reducethe dependency on the core interest income.
Going forward, we see the growth to continue as the bank focuses to serve in under bankedand underpenetrated markets in India. The bank looks fairly stable in terms of asset qualityeven as some of its peers are struggling with high NPAs. We recommend our investors should subscribe to the IPO, and it could be a multibagger in long-term.
Issue Open: 15 Mar 2018 to 19 Mar 2018
The share capital of Company, is set forth below (Amount in except share data)
Authorized Share Capital: 5,000,000,000 Equity Shares @10 Aggregate values 50,000,000,000
Issued, subscribed and paid up capital before the Issue: 1,095,141,034 Equity Shares @10 Aggregate value 10,951,410,340
Present Issue: 119,280,494 Equity Shares @ 10 aggregating up to Rs 4,473.02 Cr
Fresh Issue of 97,663,910 Equity Shares @ 10
Offer for Sale of 21,616,584 Equity Shares @ 10
The objects of the Offer are:
BFSL was incorporated on December 23, 2014, and began operations on August 23, 2015. Bandhan Financial Services Limited ('BFSL'), parent company, transferredits entire micro finance business to the bank. BFSL was India's largestmicro finance company by number of customers and size of loan portfolio.
The company's network is sprawled over 2,546 doorstep service centers (DSCs) and 9.47 million micro finance loan customers. The bank currentlyoperates through 864 branches and 386 ATMs together serving 1.87 million general banking customers. It has a strong presence in northeast West Bengal, Assam and Bihar,which account for 57.75% of the branches and 58.13% of the DSCs.
The bank's core strength is in micro finance as well as micro, small and medium enterprises loans and small loans.
The bank's 97% of the loan portfolio comprises of priority sector lending. In addition, the bank also offers other banking products to the customers and earns non-interest income from these products. These include debit cards, internet banking, mobile banking, EDC- POS terminals, online bill payment services and distribution of third party general insurance products, mutual fund products, etc
Company objectives are to expand their market share and aim to accomplish this through the following strategies:
Total Revenues stood Rs 3954.5cr, ₹4320.1cr, ₹1731.2cr and ₹7.9cr, in nine months period ended December 31, 2017, Fiscal 2017, Fiscal 2016 and Fiscal 2015 respectively.
For the nine months ended December 31, 2017 and 2016, had net interest margins ('NIMs') of 9.86% and 10.34%. Bank earned a net interest of Rs 933 crores in the financial year 2016. These earnings were Rs2,403 crore in the year 2017 & Rs 2169 crores in the first nine months of the financial year 2018,
PBT was ₹1461.1cr, ₹1704.4cr, ₹413.5cr and ₹2.3cr,in nine months period ended December 31, 2017, Fiscal 2017, Fiscal 2016 and Fiscal 2015 respectively. PAT was ₹757.7cr, ₹1111.9cr, ₹275.2cr and ₹0.5cr, in nine months period ended December 31, 2017, Fiscal 2017, Fiscal 2016 and Fiscal 2015 respectively.
Company had ROE of 25.55% and 27.88% and ROA of 4.07% and 4.39%, for FY 2017 and FY 2016 respectively.
Bandhan Bank has the highest return on average assets amongst its peers in fiscal year 2017
While the Bank has the highest NIM amongst scheduled commercial banks and NBFCs/HFCs, the figure is lower than the NIMs of some MFIs and SFBs.
It has one of the lowest cost-to-income ratios, with only ICICI Bank and Gruh performing better.
Percentage of Gross NPA to Gross Advances, excluding IBPC/assignment was 0.51% as of March 31, 2017 & 1.67% as on December31,2017.
By December 31, the gross NPA stood at 1.7 % and Net NPA at 0.8 %. As on December 31, 2017 and for FY 2017, Provision for NPA was ₹2,02.17 crores and ₹25.10 crores, respectively.
The bank looks fairly stable in terms of asset qualityeven as some of its peers are struggling with high NPAs. We recommend our investors should subscribe to the IPO, and it could be a multibagger in long-term.
Review By Rudra Shares & Stock Brokers Ltd on Mar 15, 2018
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