Introduction

RBL Bank, established in 1943, is one of Indias fastest growing scheduled

commercial banks. It is continuously expanding its presence across India through a
growing network of branches and ATMs. , The Bank currently services more than
700,000 customers and has a total business size of over Rs. 20,000 Cr.
The Bank focused on a transformational blueprint in 2010 to build a Bank of Choice
in the next five years. Powered by a strong governance framework and a dynamic
management to facilitate the transition, the Bank has gained the trust and confidence
of both domestic and global investors. The bank has raised a total of Rs 2,000 Crore
of Tier 1 capital from private and institutional investors and consistently delivered on
shareholder expectations.

Management and Internal Structure

RBL Bank has been successful in bringing on board highly accomplished individuals
from the financial services industry. . The management team of RBL Bank is a perfect
example of this. A few examples of their team members include people like the
Managing Director and CEO: Mr. Vishwavir Ahuja, who has been the Managing
Director and Chief Executive Officer of RBL Bank Ltd. He was previously Managing
Director & CEO, Bank of America (India), and an accomplished banker with career
spanning over 31 years. Also members like Rajeev Ahuja (Head-strategy), who
brought over 25 years of experience in investment banking and financial markets in
India, Singapore and Hong Kong and Sunil Gulati (Chief risk officer) who served as
the Chief Knowledge Officer and Group President of Corporate and
Institutional/Emerging Corporate Banking and Corporate Development of YES
BANK Limited bring years of experience and knowledge to the table.
Having already led the transformation of the bank into a modern bank of choice the
management is well equipped for all challenges they may face in the future

Ownership Pattern
Management and private institutional Investors currently hold shares in the company.
Post IPO majority of the shares will continue to be held by QIBs with retail investors
holding a small portion of the shares.

Strategy
Over the course of 2010-2015 the bank focused on transforming from an old private
sector bank to a modern Bank of Choice. They plan on focusing on Casa (current
and savings account deposits), as they become more known in the geographies they
are currently present (in). Over the last couple of years, they have expanded in
Madhya Pradesh, Tamil Nadu and Gujarat. Casa, the cheapest source of money for
banks, are deposits on which little or no interest is paid. RBL Bank had a deposit base
of Rs.11,599 crore as on 31 March, of which 20% was Casa. The bank hopes to raise
it by 1 percentage point every year starting this fiscal year.
Additionally the bank is focusing on inorganic growth with its recent acquisition of
the RBS asset portfolio as an example of this. The bank booked a one-time charge
towards the acquisition in 2013-14, which meant profit for that year at Rs.93 crore
was little changed from Rs.92.4 crore in 2012-13. The bank is targeting a growth of
40-50% in advances and deposits in the next two years.



SWOT Analysis
Strengths
Weaknesses
Strong Management Team
Perception as an old Private sector
Established company with 70
bank
years of practice
Growth in NPAs across the
Ranked Indias fastest growing
banking sector in FY2014-15
Mid side Bank
Acquisition of RBS portfolio
Large Deposit base with strong
retail and branch presence across
multiple states
Consistent Profitability
Opportunities
Threats
Inorganic growth via targeted
Exposure to credit rates and
acquisitions such as RBS portfolio
defaults
Rate cuts by RBI may prove
Growth of other private sector
favorable to growth
banks
Organic growth of retail business
New Banking licenses given by
Microfinance
and
Financial
RBI
inclusion schemes such as Jan
Change in regulatory environment
Dhan Yojana
and stricter compliance norms

Risk Factors:

The Indian financial sector is very competitive and our growth startegy
depends on our ability to compete effectively.
We may not be able to raise capital at approriate times which could limit our
growth prospects.
Availabilty of funding and increase in funding costs could adversely affect our
financial performance.
We may experience delays in enforcing our collateral when borrowers default
on their obligations to us, which may result in failure to recover the entire
amount of deafult and and adversely affectour financial performance.
We are required to maintain cash reserve and statutory liquidity ratios and
increases in these requirements could adversely affect our business.
We have concentrations of loans to certain sectors and if a substantial portion
of these loans were to become non-performing, the qulity of our loan portfolio
could be adveresely affected.
Changes in interest rates may adversely affect our banking business.
We are exposed to fluctuations in foreign currency rates.

Financial Information
As seen from the graphic below, RBL Bank has witnessed significant growth in all
key financial indicators over the past few years.

As can be seen the networth has grown multiple times from Rs 42.14 Cr to Rs 2011
Cr over this period and profit for the FY 14 stands at Rs 97.67 Cr after a one time cost
for the aquistion of RBS assets. Book Value per share too has grown from Rs 33 to
Rs 71 from FY10 to FY 14

Valuation
As of Jan 2015, the avrage P/B ratio for stocks in the Bank Nifty stood at between 2.9
and 3.1. This would Value RBL shares between Rs 205 and Rs 220 per share. This
would lead to the P/V ratio being on the higher side for the FY 14-15 but this can be
attributed to the cost of aquireing RBS assets.
The bank also raised Rs 328 Cr from global investors including CDC Group and Asia
Capital and Advisors. Existing investors, including International Finance Corporation
(IFC) and Gaja Capital, also participated in the capital infusion at Rs 128 Per share.
This underscores the belief of investors that the management can continue to deliver
on expectations.

Projections

Given the banks potential to capture a large market share, the investors are likely to
get an annual market return of 20-25%, said Vikas Khemani, chief executive for
wholesale capital markets at Edelweiss Financial Services Ltd. He added that RBL
Bank could gain immensely at a time when public sector banks have been losing
market share to private banksa trend that is expected to accelerate with state-owned
banks starved of adequate capital for growth. This can also be seem from the growth
of other private sector banks post IPO which have experienced massive growth in the
past 1o years. The charts of Yes Bank (left) and Kotak Mahindra Bank (right) shown
below indicate he trajectory we expect RBL to follow.

Additionally with the RBI governer stating that interest rates are unlikely to rise in the
near term the Bank will benefit from the stable enviroment and experice hagher
growth rates.

Offer Objects
Having completed the transformation proect the management is now focussed on
growth and increasing operational capabilities. The funds raised from the offer will
primarily be used to fund growth of RBLs network and and add more branches and
ATMs. Additionally the funds will increase our Tier 1 Capital and allow us to
expand our deposit base and operations while being compliant with Basel III capital
adequacy norms.
With an estimate of post cost proceeds of the IPO being Rs 290 Crore, this will allow
us to increase risk weighted assets by approximately Rs 2,800 Crores while being
compliant with Basel III norms and RBI regulations. This additional capacity for
expantion will make opening of new braches economically feasible and enable us to
stratgically strengthen our network. This will enable us to create a strong brand and
deliver on customer expectations. Additionlly the goodwill and public awareness
created by listing on a stock exchange will create trust and customer awareness about
our brand.

Offer Structure
The offer consists of 150000 Rs 10 equity shares priced in a band of Rs 180- Rs200 to
raise between Rs 270 and Rs 300 Crore. It will be carried out through the book
building route. The total dilution byway of this offer would be 5.22 %.

Allotment
Allotment will be carried out on a Price priority basis. Allotment will be subject to
disceretion of the lead book runner for QIBs.