share price of RBL Bank It hit a record low of Rs 87.60 as it fell nearly 23 per cent on the BSE in Monday’s intra-day trade after the Reserve Bank of India. India (RBI) approved the appointment of R Subramaniakumar as Managing Director and Chief Executive Officer (MD&) CEO) of the private sector lender. “… A meeting of the Board of Directors will be convened to approve the appointment of Shri R Subramaniakumar as Additional Director and Managing Director and CEO of the Bank and thereafter the approval of the shareholders will be taken,” the bank said. In its stock exchange filing on Saturday.
Prior to this, Subramaniakumar was the former Managing Director and Chief Executive Director of the state-run Indian Overseas Bank. He was also appointed as the administrator of Dewan Housing Finance Company Limited after the board of the mortgage financier was superseded. “Looking at his profile, he comes across as a troubleshooter with decent success in IOB/DHFL. However, his selection as MD and CEO of a private bank, despite interim management assurances on asset quality and plans to re-orient the bank on the growth path, is a bit surprising,” analysts at brokerage Emkay said in a statement. Said in the note.
In December last year, the then MD and CEO of RBL Vishwavir Ahuja had gone on an indefinite leave. Executive Director Rajiv Ahuja was appointed as the interim Managing Director and Chief Executive Officer. Ahuja’s departure came after the RBI appointed Yogesh Dayal, one of RBL’s chief general managers, as an additional director on the lender’s board.
What should investors know?
According to analysts at Kotak Institutional Equities, RBL Bank has resolved a concern, however, issues on the bank’s strategy are unclear given its reliance on high-yield product segments, employee retention, and recovery and growth in return ratio. . “We need clarity on (1) creation of credit mix. Major profit pool of the bank comes from credit card and MFI business. Any change in this model will hurt near-term prospects on growth and profitability. (2) Employees Retention / Hiring Strategy. ESOPs generally play a vital role in retaining the talent and price performance of RBL Bank as the listing has not been impressive. (3) Normalization of RoE journey can be lengthy. The path to RoE further More clarity is needed and a lot of changes may happen in the next few years and more time may be required for the bank to achieve higher ROE from the current levels,” he said in a report dated June 13.
RBL Bank: Stock Price History
In the past six months, the bank’s market cap has shed more than half (down 52 per cent) against a 9 per cent fall in the S&P BSE Sensex. RBL Bank has faced a number of issues on the growth front over the years from corporate book blow-up to the impact of recent COVID on its microfinance institutions (MFIs) and cards business.
What should investors do now?
“Amid the uncertainty, we downgrade the stock from buy to hold with a revised target price of Rs 110 (earlier Rs 140). We expect the stock to remain under pressure in the near term, as investors will want to wait for the new management’s business strategy, which includes near-term growth/asset-quality movement,” the note said.
Another leading brokerage, CLSA, has downgraded RBL Bank stock with a target price of Rs 130 to outperform RBL Bank, indicating a gain of 15 per cent from its previous close of Rs 114.45. “Leadership flow and liability are major headwinds but the lender has a manageable asset quality. RBI has approved R Subramaniakumar as the new MD and CEO of the lender, despite several queries,” it said.
The views and investment suggestions of experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decision.
read all breaking news , today’s fresh news watch top videos And live TV Here.