RBL Bank to raise ₹6,500 crore via combination of QIP, debt securities

RBL Bank announced on Thursday, June 27, that it will raise up to ₹6,500 crore through a combination of qualified institutional placement (QIP) of shares and a debt issue. The private lender will raise ₹3,500 crore through a QIP and ₹3,000 crore through an issue of debt securities by way of a private placement.

This will be RBL Bank's first share issue via institutional placement since 2021, when the bank saw an abrupt management transition. The Reserve Bank of India (RBI) increased scrutiny of the lender by temporarily appointing a director to its board amid reports of a large share of unsecured borrowing on its books.

Also Read: RBL Bank Q4 results 2024: Net profit grows 30% YoY, deposits up 22%; declares ₹1.50 per share dividend

The fundraising comes as the private lender targets a 20 per cent growth in its loan book over the next two financial years, largely led by an increase in secured retail assets. RBL Bank, however, did not provide details on how it will deploy the proceeds of the latest capital raise in its exchange filing today. Shares of RBL Bank settled 1.88 per cent higher at ₹262.50 against a 52-week high of ₹300.50 apiece on the BSE.

RBL Bank's board also approved the consequential alteration to the capital clause of the Memorandum of Association subject to the approval of the RBI and members of the bank. Public-sector banks including Punjab National Bank (PNB) and State Bank of India (SBI) have also recently approved raising funds.

Also Read: RBL Bank vs DCB Bank: Which bank stock should you buy for long-term? Here's a 5-point analysis

RBL Bank Q4 Results

During the March quarter of FY24, RBL Bank declared a strong operating profit growth of 49 per cent on year-on-year (YoY) terms. The board of directors of the private lender also declared a ₹1.50 dividend for eligible shareholders while announcing its Q4 results. RBL Bank reported a rise in net profit both annually and sequentially. The private lender reported a net profit of ₹353 crore in Q4FY24, logging a QoQ rise of 51 per cent and a 30 per cent rise YoY.

The private lender reported that six lakhs new customers were added during the quarter ended March 2024. The bank's provision coverage ratio including the technical writeoff was 89.8 per cent during Q4FY24. The Maharahstra-based lender had reported a net profit of ₹271 crore in the year-ago period.

The core net interest income (NII) grew 18 per cent to ₹1,600 crore on a 20 per cent loan growth. However, it was limited by a compression in the net interest margin to 5.45 per cent against 5.62 per cent a year ago. The other income grew 30 per cent to ₹875 crore during the reporting quarter for RBL Bank.

Also Read: RBL Bank Q4 results 2024: Net profit grows 30% YoY, deposits up 22%; declares ₹1.50 per share dividend

Brokerages on RBL Bank

According to domestic brokerage firm Religare Broking, RBL Bank has been in a steady uptrend for over two years demonstrating a resilient structural development. In the process, the stock has neglected its lower top lower bottom formation by surpassing its previous swing high.

RBL Bank has registered a fresh breakout from a symmetric triangle pattern on the weekly charts. ‘’Following the price action and buoyancy in the banking sector we believe bullish tone to continue in the stock,'' said Religare Broking on RBL Bank. The brokerage has maintained a ‘buy’ rating on RBL Bank at a target price of ₹290 in the range of ₹264- ₹268 for a one-month period.