Why RBL Bank shares hit 52-week low, Bajaj Fin slid 1% in today's trade?

RBL Bank and Bajaj Finance shares traded in red in Monday's trade on BSE after both companies mutually decided to stop the issuance of new co-branded credit cards. While RBL Bank shares clocked a 52-week low at Rs 147.55 per share on BSE, Bajaj Finance registered an intraday low of Rs 6,493 per share.

 

Around 10:56 AM, RBL Bank shares were down 2.71 per cent at Rs 150.8 per share and Bajaj Finance share price was down 1.01 per cent at Rs 6511.15 per share on BSE. In comparison, the BSE Sensex was down 0.20 per cent at 79,640.06. 

 

 

"RBL Bank Limited and Bajaj Finance Limited have been in discussion over the last month, and it was felt that synergies through this co-brand partnership have undergone significant change over time. It was therefore decided to stop issuance of new co-branded credit cards under this partnership," the filing read. 

 

Following the development, RBL Bank informed that co-brand cards issued to date will continue to operate as usual without any change. 

 

Additionally, cardholders of RBL and Bajaj Finance co-branded credit cards will continue to be the customers of RBL Bank as they were hitherto and can continue to use their cards on the same terms and conditions as at the time of the issuance of such cards. 

 

RBL Bank has assured the cardholders that they will enjoy the same benefits, rewards, offers, etc., associated with their existing cards. However, upon renewal, these cards will be reissued as RBL Bank-branded credit cards. 

 

Motilal Oswal has reiterated a 'Neutral' rating on RBL Bank stock with a revised target price of Rs 170 per share.

 

"We moderate our growth and margin estimates and cut our FY25/26E profit after tax (PAT) estimates by 5 per cent/15 per cent. We, thus, estimate RBL Bank to deliver FY26 RoA/RoE at 0.9 per cent/9.1 per cent," the report read.

 

RoA refers to return on asset and RoE refers to return on equity.

 

Meanwhile, the brokerage continued a 'Neutral' rating on Bajaj Finance stock with a target of Rs 7,250 per share. 

 

"While the valuations are attractive at 3.5x P/BV and 19x FY26E P/E, we do not anticipate any significant upside catalysts until it successfully navigates the asset quality challenges in its business to customer loan book and makes concerted efforts to improve the proportion of secured loans in its loan mix," the report read.

 

Post the termination of co-branded cards, the brokerage does not expect any material impact on the profitability of either of the companies.