RBL Bank shares fall today, what do brokerages say on the stock?

In a surprising turn of events, the Reserve Bank of India (RBI) has appointed its Chief General Manager Yogesh K Dayal as an additional director on the board of RBL Bank.

Brokerage house Emkay is of the view that in order to give comfort to investors, more clarifications will be required from the management about six months before Vishwavir Ahuja’s term ends and RBI’s intervention (usually Ujjivan, Dhanalakshmi, LVB, as seen in weaker banks) to justify the sudden exit. Jammu and Kashmir Bank).

“That said, we do receive some comfort from the appointment of Rajiv Ahuja as interim MD and CEO, with healthy liquidity buffer/capital ratio and management’s strategic intention to shift the portfolio mix towards safer assets. However, near / Medium term trading / Asset quality dislocation is inevitable,” the brokerage said. It has retained the hold rating with the target price 165.

The bank’s newly-appointed MD and CEO Rajiv Ahuja told reporters that the bank is not anticipating huge capital requirement in the short term, countering the apprehensions of problems in the management. He added that the December quarter is expected to be even better, and in the March quarter, the bank will hopefully return to its pre-pandemic performance.

A day after its top executive stepped down, RBL Bank clarified that these developments are in no way a reflection of the bank’s fundamentals. It further said that these developments are not due to any concern over the bank’s advances, asset quality and deposit levels and have the full support of the RBI.

In recent months, reports suggested that some employees of RBL Bank sought the finance ministry’s support to oversee operations as they believed the regulatory framework was being overlooked by the bank’s top management.

Another brokerage ICICI Securities said, “The impact of this move on various stakeholders (including depositors, employees, etc.) and the resulting breach of trust and disruption would be significant monitoring. With anticipated high tensions and sluggish growth, we were of the view that A modest RoA/RoE profile will limit the assessment.”

The brokerage has downgraded the stock to sell with a revised target price of 130 (earlier: Rs 181) as it believes this incremental unfavorable development will further ease interim pressure and could drag down valuations.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.