Global View: CLSA, Morgan Stanley slash target price on RBL Bank post board meeting

Global brokerage firms such as CLSA as well as Morgan Stanley slashed its target price on RBL Bank after MD & CEO Vishawvir Ahuja goes on medical leave, and the RBI has appointed Rajeev Ahuja as the interim Managing Director and Chief Executive Officer of the bank with an immediate effect.

The Reserve Bank of India (RBI) has also appointed its Chief General Manager Yogesh K Dayal as an additional director on the board of RBL Bank.

The board in a meeting held on Saturday appointed Rajeev Ahuja (currently the Executive Director) as interim Managing Director & Chief Executive Officer of the bank with immediate effect, subject to the regulatory and other approvals, the bank said.

The other terms and conditions of his appointment such as remuneration, would remain unchanged.

Also Read: RBL Bank's Vishwavir Anuja steps down

We have collated a list of recommendations from various global brokerage firms according to a Zee Business TV report:

CLSA: Outperform| Target cut to Rs 200 from Rs 230 earlier

CLSA maintained the outperform rating on RBL Bank but slashed its target price to Rs 200 from Rs 230 earlier.

In a surprise move, the RBI has appointed an additional director to RBL’s board; the board has accepted Vishwavir Ahuja’s leave request and appointed Rajeev Ahuja as interim MD & CEO.

In the past, this action by RBI have usually come when banks have been in trouble and is contrary to management commentary, where it reiterates that the banks' performance would continue to improve and there would not be any asset quality impact.

This move will lead to uncertainty in the near term and reasons for this move by the RBI are not well known. 

The global investment bank believes that the next six months will be key in validating management’s reiteration of its expected performance.

Morgan Stanley: Underweight| Target cut to Rs 170 from Rs 190 earlier

Morgan Stanley maintained underweight rating on RBL Bank and slashed its target price to Rs 170 from Rs 190 earlier.

The news is negative for RBL and “could imply more near-term pressure on profitability as the bank optimises its balance sheet further.

Investec: Buy| Target Rs 295

Investec maintained its buy rating on RBL Bank with a target price of Rs 295. The RBI inducts board member, and forces CEO change.

Note that the event is clearly a negative outcome from investor confidence perspective, especially given that previous instances have always ended with adversely for minority shareholders.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)