RBL Bank rally! Sustainable?
RBL Bank's share moved up by 26% in the past week. After hitting upper circuits on Wednesday and Thursday afternoon, the stock currently trades at INR 128.
Plausible reasons for RBL share price soaring:
✅Stake buy: US-based College retirement equity fund (CREF) bought 4,584,678 shares of RBL Bank at an average price of Rs 108.86 per share. This fund already holds 69,34,488 shares or a 1.16% stake in the company.
✅Fundraising: The board cleared raising of up to Rs 3,000 crore to fund the lender's business growth. The fundraising will be subject to the approval of the shareholders
✅Quarterly results:
-Net profit increased to 201 crores in Q1 FY23 from -459 crores from Q1 FY22.
-Net Interest income was 1028 crores in Q1 FY23, 6% up from Q1 FY22.
Despite the rally this week, RBL Bank's share price has delivered negative returns (3%) to investors in 2022. In the past 5 years, it has lost three-fourths of its share price value.
A few reasons for stock’s bad performance in the market might be:
🛑Weak fundamentals: Rising NPA’s, RBL bank's gross NPA stands around 4.08%.
🛑Management changes: RBI appointed an additional director in the bank.
🛑Shareholding pattern changes: FII’s exits (holding reduced from 31.6% to 28.5%),
Reduced mutual fund holding (to 6.72% from 15.8%) in the last few quarters.
What are your views on RBL Bank?
