RBL Bank share price touches new record low, stock down over 18% intraday – know why recovery path of bank still uncertain?

Shares of RBL Bank Limited touched a new record low of Rs 92.75 per share, after plunging over 18 per cent on the BSE intraday during Monday’s trading session. The bank on Saturday announced the appointment of R Subramaniakumar as Managing Director and CEO for 3 years.  

The MD and CEO position has been filed nearly six months after Vishwavir Ahuja stepped down from the position due to the Reserve Bank of India’s intervention. RBL Bank had come under the RBI scrutiny in December 2021, after which the regulator appointed its CGM Yogesh Dayal as the additional director on the bank’s board for a term of two years. 

Global brokerage firm CLSA sees leadership flux and liability headwinds for RBL Bank, it added that the company’s CEO appointment raises several questions. The brokerage downgraded the rating to Outperform from Buy with a target price of Rs 130 per share (15% upside). 

Stating that the path of recovery for the bank is still uncertain, Kotak Institutional Equities said the appointment of MD & CEO addressed one concern, however, issues on the strategy of the bank given its reliance on high-yielding product segments, employee retention, and recovery in return ratios and growth remain unclear.  

It maintained RS rating on the bank as it is yet to get clarity on the thought process of the new team and doesn’t expect the management to make any big announcements in the near term. The stock is inexpensive but also lacks the re-rating trigger which could take it higher from current levels, it said.  

In the mid-cap banks, there are several banks that are a bit more expensive than RBL but the recovery from Covid seems to be better and cyclically well-positioned, Kotak Institutional added. 

The stock in the last 6 months has corrected over 51 per cent as compared to over 9 per cent fall in the BSE Sensex. At around 11 AM, the scrip is trading nearly 16 per cent lower to Rs 95 per share as against a 2.6 per cent decline in the benchmark index.