In Friday’s morning trading session, the shares of one of India’s leading private sector banks surged by 3 percent on BSE to Rs. 270.4, after the bank’s Board approved raising funds for a total amount of Rs. 6,500 crore via QIP and debt securities.
At 11:23 a.m., the shares of RBL Bank Limited were trading in the green at Rs. 265.7, up by 1.2 percent, as against its previous closing price of Rs. 262.5, with a market cap of Rs. 16,121 crore.
What’s the news:
According to the latest regulatory filings with the stock exchanges, the Board of the RBL Bank approved raising a total of up to Rs. 6,500 crore by way of a Qualified Institutions Placement (QIP) and issue of debt securities.
RBL Bank plans to raise up to Rs. 3,500 crore through a QIP (by means of issuing Equity Shares), in one or more tranche or tranches, which will constitute up to 15 percent of the bank’s post-issue paid-up equity share capital.
Additionally, the bank will raise Rs. 3,000 crore by the issue of debt securities, in one or more tranches, on private placement basis.
What’s the reason:
The bank will raise Rs. 6,500 crore through its initial institutional placement of shares, marking its first such move since 2021.
During that year, the bank underwent a sudden change in management, and due to heightened scrutiny from the central bank, a director was temporarily appointed to its board. This was prompted by concerns over a significant portion of unsecured borrowing recorded in its financial statements.
Presently, RBL Bank aims to grow its loan portfolio by 20 percent over the next two fiscal years, driven primarily by an increase in secured retail assets. This loan growth strategy is one of the reasons behind RBL Bank’s recent fundraising plans.
Financial & Stock Performance:
In terms of financials, the after-tax profit of the bank stood at Rs. 364.43 crore in Q4 FY23-24, rising by 22 percent YoY from Rs. 298.6 crore in Q4 FY22-23, while the Net NPA declined by nearly 20 percent from Rs. 772 crore in Q4 FY22-23 to Rs. 619 crore in Q4 FY23-24.
On a year-on-year basis, the bank’s Net Interest Income (NII) increased by 18 percent to Rs. 1,600 crore in Q4 FY23-24 from Rs. 1,357 crore in Q4 FY22-23.
The stock has delivered positive returns of nearly 51.2 percent in one year but around 6.7 percent of negative returns year-to-date.
As per the shareholding pattern of March 2024, the Foreign Institutional Investors (FII) hold a 25.14 percent stake in the bank, while Retail Investors and Domestic Institutional Investors (DII) hold a 54.35 percent and 20.51 percent stake in RBL Bank, respectively.
About the bank:
RBL Bank Limited offers specialised services under five business verticals namely: corporate banking, commercial banking, branch & business banking, retail assets and treasury and financial markets operations.
It currently services more than 1.55 crore customers through a network of 545 branches; 1,272 business correspondent branches and 395 ATMs spread across 28 Indian states and Union Territories.
Written by Shivani Singh
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