IPO Analysis: Green Development Bank Limited

Overview

 

Collection Center

Company Profile

Incorporated in November 2012, Green Development Bank Limited (GRDBL) started its commercial operations from August 2013, as a three district (Baglung, Myagdi and Kaski) level regional development bank. Its head office is located at Baglung. GRDBL is promoted by 57 individual promoters, with maximum individual shareholding of 27% of total capital before IPO (which will be diluted to 15% post IPO). The current 100% promoter holding in GRDBL will be diluted to 55% post IPO; remainder being allotted to general public.  

Capital Structure

 

Board of Directors

Financial highlights

         

Financial Analysis

Green Development Bank Limited (GRDBL) has reported net loss of NPR 2.69 million during   FY 2014/15 (first full year of operations) over an asset base of NPR 299 million as on mid Jul-15 as against net loss of NPR 6.59 million during 2013/14 over an asset base of NPR 127 million as on mid Jul-14. During first quarter of FY 2015/16, GRDBL reported modest net profit of NPR 0.07 million. GRDBL’s Capital to Risky Asset Ratio (CRAR) was 17.08% and gross Non Performing Loan was nil as on mid-Oct-2015. Green Development Bank has more than 55 percent of expenses under staff expenses title. The development bank has small scale of operation, limited track record and week competitive positioning Year to year growth of earning per share of development bank is approximately 22% increase as shown in its forecasting data. The earning per share of the company in F/Y 2074/75 is   Rs 7.44 which is less than industrial average. The third quarter report of the bank shows its net profit has reached to Rs 1.30 million and Eps  stands at RS 2.36. The earnings profile will depend on the management efficiency utilizing of capital and assets along with proper diversification of loan portfolio whereas maintaining low cost of funds. The development bank has not disclosed its plan regarding the distribution of cash or stock dividend for upcoming years, however in its paid-up capital increment plan, it has mentioned to issue rights amounting Rs 400 million in FY 2073/74. There is enormous growth opportunity for investors as it will be mandatory for the company to raise its capital within a short span of time. However, the alternative to get merged with other entity always remains. The bank’s forecasted Return on Equity (ROE) for upcoming three fiscal years is supposed to remain between 5% to 9% ( below industry average) which depicts the company is not expected to generate net profit proportionate to increased equity.