RBL Bank Limited shares hit a new low of Rs 92.75 per share after falling more than 18% on the BSE intraday during Monday’s trading session. After R Subramaniakumar was named Managing Director and CEO of the bank on Saturday for a three-year term.
The position of MD and CEO has been posted nearly six months. After Vishwavir Ahuja resigned due to intervention by the Reserve Bank of India. RBL Bank was investigated by the RBI in December 2021, after which the regulator appointed its CGM Yogesh Dayal as an additional director on the bank’s board for a two-year term.
CLSA, a global brokerage firm, sees leadership uncertainty and liability headwinds for RBL Bank, adding that the company’s CEO appointment raises several questions. The brokerage reduced the rating from Buy to Outperform. With a target price of Rs 130 per share (15 percent upside).
Path of recovery still uncertain
Kotak Institutional Equities stated that the path of recovery for the bank is still uncertain. The appointment of MD & CEO addressed one concern, but issues on the bank’s strategy given its reliance on high-yielding product segments, employee retention, and recovery in return ratios and growth remain unclear.
It kept the bank’s RS rating. Because it has yet to gain clarity on the new team’s thought process. And does not expect the management to make any major announcements in the near term. The stock is cheap. But it lacks the re-rating trigger that could propel it higher from current levels. According to the company.
There are several mid-cap banks that are slightly more expensive than RBL, but Covid’s recovery appears to be better and more cyclically well-positioned. Kotak Institutional was also added.
In the last six months, the stock has corrected by more than 51%. While the BSE Sensex has fallen by more than 9%. At around 11 a.m., the scrip is trading nearly 16% lower at Rs 95 per share. Compared to a 2.6 percent drop in the benchmark index.