5 Things to Consider Before Purchasing New NRBC Stock

5 Things to Consider Before Purchasing New NRBC Stock

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Introduction

The NRBC stock IPO is almost around the corner. Many people are eagerly waiting for the launch. You must be very careful about them because not IPO’s are profitable. There are certain factors that you must keep in mind before applying for the NRBC Stock. NRBC Stock is going to launch pretty soon and In this article we are about to share these factors about NRBC stock IPO.

Company Profile

The NRBC Bank is the leading provider of corporate banking services in Bangladesh, providing a wide range of corporate finance products like conventional working capital finance to project finance. They also provide service to meet the domestic and overseas needs of small, medium and large enterprises. They also provide further services to Multinational and domestic companies operating in all sectors of the economy through contracting, banking, transportation, real estate and foreign trade, are clients of the Bank.

A strong portfolio of term loans, including some syndicated loans, is also available. The Revenue & Net Profit growth comparison shows that the bank has risen faster than the industry average over the last couple of years, referring to the bank’s outperformance relative to the banking sector in the region. By using its total assets, NRBC generated a slightly greater return than the average of the banking sector.

The future business of NRBC stock should be taken into account in the light of rising levels of NPL in the banking sector as a whole. You can consider it as a valuable business advantage when you consider the benefits that come with an NRBCB account, combined with the help and advice you get from your Relationship Manager.

NRBC Stock IPO Summary

The NRBC stock raised a capital of 1200 BDT nm. Their Pre IPO paid up capital was 5,825 nm while their post IPO paid up capital was 7,025 nm. They are authorized capital is 10,000 nm. They are releasing their stocks in 500 lots at 10tk per share and they are releasing them from the 3rd of February. Their credit rating is A.

Risk Factors

Due to heavy competition in the banking sector, it could be difficult for NRBC bank to sustain its growth and gain competitive advantage over competitors. If the NPL rise continues, it may be difficult for the business to drive financial efficiency overnight. Deposit mobilization appears to be difficult for Bangladesh Bank’s reduced market interest rate. Bank loan interest rate volatility will drive its cost of funds and result in lower profitability. Future changes to national and international regulations may affect its long-term prospects.

Throughout the last few years here are some of the risk assessments factors that might help you understand them a bit better. Although the NPL appears low as a percentage of Total Loans & Advances, the NPL of the bank as a percentage of Equity in 2020-HY & 2019 is significantly high, suggesting a high-risk level. NRBC produced negative FCF in 2018-19, disclosing its poor financial results and weakness to meet stakeholders’ expectations.

In the past two years, the company suffered a moderate amount of NPL, which is a bit of worrying for the investors. OCF to Equity fell significantly from 89 percent to just 12 percent between the FY2019 & 2020-HY, which tells of its deteriorating cash flow performance. The company has a substantial amount of off-balance sheet exposure that accounts for 33 percent and 30 percent in proportion to the cash flow basis which indicates its increased level of leverage & financial risk

NRBC Stock RIL Investment Rating

One of the important indicators that decide the overall output of the IPO is considered to be the RIL Investment Ranking. We will break down the elements we considered in terms of the IPO rating below.

Management Capacity

The efficiency of an IPO depends a great deal on the standard of the governing body. In simple words, learning about the company’s directors is not a must-have when applying for an IPO. It is useful to consider more relevant considerations to consider before applying for an IPO. Their management capacity is quite qualified and they experienced. NRBC Stock gets a 3 out of 5 for their management capacity.

Financial Performance

From the perspective of a trader, knowing the company’s fiscal year earning is significant. The rising earnings trend would represent the company’s EPS, in the future. An upward graph of the annual earnings reveals a business with a stable financial position. This is very important to maintain in the stock market and support the shareholders in the long run for every company. Their Financial performance is quite moderate, profitability dependent, EVA and cash flows. Because of being moderate they are getting a 2 out of 5 in the financial performance sector.

NRBC Stock Potential of Industry & Business Growth

Their potential in this competitive industry is really good. NRBC generated a slightly greater return than the average of the banking sector. NRBC stock growth in the last few years indicates the outperformance of the bank in comparison to the country’s banking sector. It has opportunity of good profitability and also has sufficient capital required to meet BASEL 3. That’s why NRBC Stock is getting 3 out of 5 in this category.

Planned Use of IPO

The NRBC stock is planning to invest 92% of the money in govt. securities and you can take this as a plus side. They are investing 5% in the secondary market and 3% will go to IPO expense category. Because of this safe investment NRBC Stock is getting a 4 out of 5 in the planned use of IPO category.

NRBC Stock Risk Assessment

The NRBC stock is still in the game despite the NPL ratio being low, FY2019 indicates that the NPL amount has increased dramatically in the past 5 years. As a percentage of Total Loans & Advances, the NPL of the bank appears poor as a percentage of Equity in 2020-HY & 2019.  In 2018-19, NRBC created negative FCF that tells of its poor financial performance and failure to meet the expectations of stakeholders. The company suffered a moderate amount of NPL in the past two years which is a concern for the investors. The level of risk in this IPO is quite moderately as per the NPL and Risk Analysis. Due to the moderate risk, NRBC Stock gets a 3 out of 5 in risk assessment.

After keeping all these factors, according to the RIL bar we can say that NRBC Bank has an average of 3 out of 5. Because of that the company falls in investable grade.

Conclusion

The NRBC stock IPO is quite a moderate level IPO. It has an average of 3 out of 5 in the RIL bar. There are certain factors that indicates that the company is a bit skeptical when it comes to financial performance. Considering the other factors this is not a bad investment for the investors as this falls into the investable category. The Demand for banking products is high. So NRBC bank needs a nationwide branch expansion if they want their market to grow big. They are technology dependent and they have an experienced management. But the bank needs high level of capital is required to support its growth. So these might help you forecast about the future of NRBC bank and help you make a decision. If you are interested and want to invest in these stocks don’t forget to give us a try.

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