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RBL Bank zooms after a US fund CREF buys additional stake

Shares of RBL Bank spiked over 5 percent on August 25 after a US-based fund acquired Rs 50 crore worth of company’s shares via a block deal disclosed a day prior.

As per the available data, College Retirement Equity Fund (CREF) bought 4,584,678 shares of RBL Bank on NSE at an average price of Rs 108.86 per share. As of June 2022 shareholding data, the fund already holds 69,34,488 shares in the company or 1.16 percent.

According to information available with Bloomberg, CREF operates as a non-profit organization. The organization offers investment options such as investment, insurance, and annuity products. CREF serves communities in the United States.

At 11:41am, the stock traded 5.93 percent higher at Rs 128.90 apiece on the BSE, while the benchmark Sensex was at 59,231.89 , up 146.46 points or 0.25 percent.

RBL Bank has seen a number of controversies in recent years. RBL Bank’s troubles began when the bank’s chief executive officer (CEO) Vishwavir Ahuja quit unexpectedly in December 2021 and the Reserve Bank of India (RBI), with immediate effect, appointed an additional director for a period of two years.

Thus, it is one of the few bank stocks that have not performed in the rally in the sector in the last two months. The stock is down 2 percent year to date. In the last one year, it is down 19 percent.

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Most analysts also don’t see much upside in the bank. Post its earnings in July, HDFC Securities said while the management articulated its strategy around building a desired scale and market share gains in its segments of choice, we opine that the recalibration of the deposit mix is likely to call for elevated investments in distribution, which is likely to prolong the time-to-maturity and return to optimal profitability.

“We lower our FY23 and FY24 earnings forecasts by 8 percent/2 percent respectively and maintain ‘reduce’ with a revised target price of Rs 105, implying 0.5x Mar-24 adjusted book value per share,” said the broker.

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