Bandhan Bank Ltd. ended its first day of trade at a premium of over 27 percent at Rs 477 on the BSE Ltd. over its IPO price of Rs 375, making it the country’s eighth most valued lender. The private sector bank’s Rs 55,880 crore market capitalisation at close also made it more valuable that all state-owned banks, excluding the country’s largest lender SBI.
The GIC-backed lender’s Rs 4,473-crore initial public offering was subscribed 14.6 times on the final day of bidding. The portion set aside for qualified institutional buyers received bids for nearly 38.6 times the number of shares on offer. The retail segment was fully subscribed, according to data shared by Axis Capital, while shares reserved for high network investors was subscribed 13.8 times.
Bandhan Bank commenced banking operations in August 2015 after receiving a universal banking licence from the Reserve Bank of India.
The lender had 887 branches as of December 2017, with a higher presence in north and north-east India. West Bengal, Assam and Bihar together account for 56.37 percent of the bank’s branches. Micro loans still continue to dominate the loan book with a share of 88 percent. Other retail loans comprise home loans, 2-wheeler loans, loan against property and gold loans. Of its 12 million customers, 10 million are women.
The bank’s net interest margin is amongst the highest in the industry.
At 35 percent, its cost-to-income ratio is amongst the lowest in the industry on account of its focus on cost structures.
The gross nonperforming assets ratio is healthier than most of the peer companies’ despite a higher share of microfinance advances (loans). The year-ago gross bad loans stood at 0.48 percent, having shot up post demonetisation.
Post the fresh issue, Bandhan Bank was available at a multiple of 4.9 times its nine-month FY18 book value. The price-to-book value ratio is closer to the country’s largest private lender HDFC Bank and much higher than peers like RBL Bank, IDFC Bank Ujjivan Financial and Equitas Holding.