Shares of RBL Bank rose nearly 9% in intraday trade on Wednesday amid speculation in the market that Mahindra Group is looking to acquire a strategic stake in the private sector lender. The conglomerate is reportedly in talks to pick up a 4% stake in the Mumbai-based bank.

Cheering the news, RBL Bank shares gained as much as 8.6% to touch a 52-week high of ₹242.1 on the BSE, before closing at ₹238.80, up 7.13%. Early today, the banking stock opened marginally higher at ₹224.70 against the previous closing price of ₹222.90. On the volume front, 19.63 lakh shares changed hands over the counter, while the market capitalisation of the bank increased to ₹14,320.77 crore.

RBL Bank has turned multibagger in the last one year, with its share price rising 165% in the last one year, from its 52-week low of ₹91.10 on July 29, 2023. In the calendar year 2023, the counter has climbed 32%, whereas it added 59% in the past six months. While the stock has gained 38% in a month, it added 11.5% in a week.

As per a news report, Mahindra Group is looking to buy a 4% strategic stake in the bank, subject to the Reserve Bank of India's (RBI) approval. The group is also keen on raising its shareholding in RBL Bank to 15-25% if it gets the central bank’s nod for the strategic stake in the private lender.

According to the RBI’s current guidelines, industrial houses may hold a maximum of 10% stake in private sector banks, but they cannot be promoters.

Mahindra Group, which is already present in the financial services sector through the group firm Mahindra & Mahindra Financial Services, is looking to expand its presence in this sector.

Last week, RBL Bank reported a strong set of numbers for the June quarter, aided by lower provisions and higher interest income. The bank posted a 43% year-on-year (YoY) and 6% quarter-on-quarter (QoQ) growth in profit at ₹288 crore in Q1 FY24.

The net interest income of the bank was up 21% YoY to ₹1,246 crore, with net interest margin increased to 4.84% versus 4.36% in Q1 FY23.

The total revenue grew 18% YoY and 2% QoQ to ₹1,932 crore, while operating profit stood at ₹647 crore, up 22% YoY and 9% QoQ.

On the asset quality front, the gross NPA ratio improved to 3.22% vs 3.37% in Q4 FY23 and 4.08% in Q1 FY23. Net NPA ratio improved to 1% from 1.10% in the March 2023 quarter and 1.16% in the same period last year.

On Q1 results, R Subramaniakumar, MD & CEO, RBL Bank said, “We have started FY24 with strong operating performance on all parameters. The advances growth was healthy with strong disbursals continuing in the retail segment. We have further improved on our granular deposits, in line with our laid out strategy. Our revenue has grown faster than operating expenses driven by optimisation of few cost lines. Owing to this, the Bank saw strong growth in Operating Profits and PAT.”

As of March 31, 2023, RBL Bank has 520 bank branches and 1,115 business correspondent branches, of which 298 are banking outlets. RBL Finserve, a 100% subsidiary of the bank, accounts for 795 business correspondent branches. It currently services over 13.65 million customers through its branches and 414 ATMs spread across 28 Indian states and union territories.

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