RBL Bank Extends Previous Day's Sharp Gains, Up By 23% In 2 Days: Here's Why

Why the sharp gains in RBL Bank stock price?

The lender's shares rallied by a steep 20% on the previous day after the bank diluted its complete stake in Kilburn Engineering. On Tuesday, the lender informed that it has further offloaded the remaining 3.5 lakhs shares, representing 1.02% (entire equity shareholding) of the paid-up share capital of Kilburn Engineering. The bank offloaded its position in Kilburn in tranches and so far has sold 67,50,000 equity shares representing 19.67% in Kilburn worth more than Rs. 30.61 crore. Now, after the recent stake sale the bank does not hold any stake in Kilburn.

A number of bulk deal transactions in the stock have also been executed on Wednesday with the latest being purchase of 3,949,518 shares of the lender at an average price of Rs. 117.54 by Share India Securities Limited.

Alongside, in order to finance the bank's business expansion, the board has given a nod to fund raising to the tune of up to Rs. 3000 crore. Additionally, the lender also authorized issue of 1.75 crore equity stock options exercisable into equivalent number of equity shares fully paid up of Rs 10 each.

 

Experts' take on RBL Bank

Analysts and experts have a bullish outlook on the stock of RBL Bank as the lender is seen to observe a more calibrated-growth strategy in the current fiscal year 2022-2023.

RBL Bank's Q1Fy23 Results

The lender in the June ended quarter of Fy23 posted net profit of Rs. 201 crore versus net loss of Rs. 459 crore during the same period last year. Net interest income or NII also logged 6% gains year-on-year to Rs. 1028 crore. Asset quality at the bank improved with gross NPA and net NPA both logging a sharp decline YoY.

Should you invest in RBL Bank?

Motilal Oswal earlier in July gave a 'Buy' call on the stock of RBL Bank for a target price of Rs. 150. This given the current price of around Rs. 125 per share offers room for further gains to the tune of close to 20%. In its report the brokerage noted that the "lender reported a beat on earnings led by lower provisions. However, business trends were weak with assets as well as deposits being flat QoQ. The bank posted a steady improvement in asset quality along with lower restructured book and a higher PCR. Opex remained elevated as RBK continued to invest in new business areas and branch expansion. On the business front, while loan growth was muted in 1QFY23, RBK expects to end the year with 15-18% loan growth driven by retail and wholesale. With more clarity on the way forward for the bank, after the appointment of its new MD and CEO, we restore our positive stance. We expect RBK to deliver FY24 RoA/RoE of 1.0%/8.6%, respectively. Reiterate BUY with a TP of INR150 (premised on 0.7x FY24E ABV)".

RBL Bank Limited is a banking entity offering services and products to individuals and small businesses across urban and rural India.