RBL Bank shares dip 20% in 4 sessions

Shares of RBL Bank extended their fall to the fourth straight session on Monday after the lender on Friday guided towards a spike in dud assets due to the exposures to a few troubled corporate entities.

The bank expects the gross non-performing assets ratio to shoot up to 2.5 per cent during the remainder of the year from 1.38 per cent in the June quarter, due to the exposure to some distressed companies, according to PTI.

The scrip hit an intraday low of Rs 474.30 on Monday, down 19.63 per cent, against the close of Rs 590.20 on July 17.

The private sector bank, however, posted a 41 percent rise in net profit at Rs 267.1 crore for the quarter ended June 30, 2019.

Brokerage firm HDFC Securities said, “RBL Bank ticked most boxes in Q1FY20, but guidance on asset quality is seriously disconcerting at the very least.” The brokerage house ‘Downgrade’ the stock to ‘Neutral’.

Gross non-performing assets (NPAs) stood at 1.38 per cent of the gross advances by end of June 2019, as against 1.40 per cent by end of June 2018.

In terms of value, gross NPAs advanced to Rs 789.21 crore by June 2019, as against Rs 595.94 crore a year ago.

The provisions for bad loans and contingencies for the June quarter were raised to Rs 213.18 crore from Rs 140.35 crore in the year-ago period.

Upside risks to current stressed corporate exposure of Rs 1,000 crore may impact GNPAs and credit cost estimates for the bank, according to Sharekhan.

The domestic brokerage firm added that RBL is currently trading at 2.1x its FY2021E book value, which is reasonable, considering the growth prospects and strong business fundamentals. Sharekhan maintains its positive view on the stock with an upside potential of 18-20 per cent.

RBL Bank is planning a share sale to raise up to Rs 3,500 crore, shoring up its capital base to expand into newer lending areas and maintain fast-paced growth in retail banking, its CEO told ET in an interview.