RBL Bank shares rebound 15% after plunging 31% in two days

Topics RBL Bank | Buzzing stocks | Markets

There has been no material adverse change in the asset quality since the announcement of the Q3FY20 financial results, the bank said
Shares of RBL Bank surged up to 15 per cent to Rs 239 on the BSE in Wednesday's early morning deals, after the private sector clarified that the bank is "financially strong and well-capitalized".

RBL Bank's stock hit an all-time low of Rs 199 on Monday, March 9, 2020. It had fallen below its IPO price of Rs 225 per share. In the past two trading days, the stock has tanked 31 per cent, against 7 per cent decline in the S&P BSE Sensex in the same period.

“We wish to re-emphasize that RBL Bank is a fundamentally strong institution. Rumors around financial health and stability of the institution especially in social media seem to be misplaced, motivated and not based on facts,” RBL Bank said in an exchange filing today.

The bank said it remains adequately capitalized with a capital adequacy ratio of 16.08 per cent with Tier-1 at 15.02 per cent, significantly higher than the prescribed regulatory requirement of 11.5 per cent and 9.5 per cent, respectively.

There has been no material adverse change in the asset quality since the announcement of the October-December quarter (Q3FY20) financial results on January 22, 2020 and guidance remains consistent, it said.

However, analysts at HDFC Securities remain cautious on RBL Bank’s asset quality as Q3FY20 saw a sharp  -- around Rs 700 crore -- rise in BB and below rated corp loans; recent asset quality trends reflect poorly on underwriting and risk practices; and broader economic conditions. While the capital raise is a big positive and will support the bank’s growth trajectory, it does not entirely mitigate the above risks, the brokerage firm had said in results review.

At 10:47 am, RBL Bank was trading 11 per cent higher at Rs 231 on the BSE, against 0.35 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped 1.6 times with a combined 18.6 million shares changing hands on the NSE and BSE so far.


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