RBL Bank shares fell over 3% after the company mutually agreed with Bajaj Finance to cease the issuance of new co-branded credit cards. This decision follows a month of discussions, during which both parties concluded that the strategic alignment of the collaboration had evolved.
“RBL Bank Ltd. and Bajaj Finance Ltd. have been in discussion over the last month, and it was felt that synergies through this co-brand partnership have undergone significant change over time. It was therefore decided to stop issuance of new co-branded credit cards under this partnership,” the filing said.
While new co-branded cards will no longer be issued, existing cardholders remain unaffected, with their cards functioning as usual. Upon renewal, these cards will transition to RBL Bank-branded cards.
Despite the end of this partnership, RBL Bank emphasized its growth in credit card issuance over the past 18 months, driven by direct channels and new collaborations. The partnership with Bajaj Finance previously facilitated the issuance of 3.4 million co-branded cards, significantly contributing to RBL Bank’s credit card portfolio.
In the meantime, brokerages have expressed diverse opinions about the potential impact of this move on the bank’s future growth prospects. Here’s a summary of their ratings, target prices, and projected upside/downside based on the current market price (CMP) of ₹154.95:
- Morgan Stanley: Underweight rating with a target price of ₹180, indicating a potential upside of 16.2%.
- Citi: Buy recommendation and a target price of ₹255, suggesting a significant upside of 64.5%.
- Investec: Maintains a Hold stance with a target price of ₹170, reflecting a modest upside of 9.7%.
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