Moneycontrol PRO
Open App
Live Now | Traders Conclave 2022 | India's Largest Retail Stock Investors & Traders Residential Conclave

RBL Bank shares hit 52-week low post RBI action; what should investors do?

The company's board accepted the request of Vishwavir Ahuja to proceed on leave with immediate effect.

December 27, 2021 / 10:03 AM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Shares of RBL Bank hit a 52-week low of Rs 138, locked at the lower circuit of 20 percent in early trade on December 27 after the Reserve Bank of India appointed Yogesh K Dayal as an additional director on the board of the bank.

"The Reserve Bank of India appointed Mr. Yogesh K Dayal, Chief General Manager, Reserve Bank of India as an additional director on the board of the RBL Bank for a period of two years w.e.f December 24, 2021 till December 23, 2023 or till further orders, whichever is earlier," the bank said in its press release.

Also Read - RBL Bank's interim CEO Rajeev Ahuja says bank has full support of RBI, asset quality issues addressed

In an another development, the company board at its meeting held on December 25, 2021 accepted the request of Vishwavir Ahuja to proceed on leave with immediate effect.

The board appointed Rajeev Ahuja (currently the Executive Director) as interim managing director & chief executive officer of the bank with immediate effect, subject to approvals.

Close

The other terms and conditions of his appointment, such as remuneration, would remain unchanged.

Also Read - RBI action against RBL Bank: What we know so far

CNBC-TV18 had reported on December 26, before the RBI action, that ace investor Rakesh Jhunhunwala and D-Mart founder RK Damani had approached the RBI with a request to buy 10 percent stake in RBL Bank.

However, today, Jhunjhunwala denied any interest in buying stake in the lender, to CNBC-TV18.

The central bank is in the process of examining the request, the news channel said.

Damani is yet to react to the CNBC-TV18 report at the time of writing this report.

Catch all the market action on our live blog

Here is what brokerages have to say about the stock and the company:

Motilal Oswal

Current developments have raised concerns about the bank’s ability to sustain a turnaround in its operating performance, while at the same time raising worries of similar actions by the regulator on other mid-sized banks, where the operating performance has been sub-optimal.

We thus put our rating under review and remain watchful of further developments and await further clarity in the 3QFY22 result.

CLSA

In a surprise move, the RBI has appointed an additional director to RBL’s board. In the past, this action by the RBI usually came when banks were in trouble. This move will lead to uncertainty in the near term.

The next 6 months will be key in validating the management’s reiteration of its performance.

We maintain an "outperform" rating and cut target to Rs 200 from Rs 230 per share.

ICICI Securities

Downgrade the rating to "sell" and cut target to Rs 131 from Rs 181.

The uncertainty looms as the RBI inducts additional director, while MD & CEO stepped down.

This interim adverse development can drag valuation to as low as 0.55x FY23 book.

Investec

Maintain "buy" call with a target at Rs 295 per share.

The recent development is clearly a negative outcome from investor confidence perspective. There are no changes to our estimates given that the management has reiterated guidance.

We placed our recommendation ‘under review’ from "buy" and will update post Q3FY22 results.

At 10:01 hrs RBL Bank was quoting at Rs 138, down Rs 34.50, or 20 percent

on the BSE.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Dec 27, 2021 09:36 am
Sections
ISO 27001 - BSI Assurance Mark