Shares of RBL Bank plunged 5 % during intraday trade on Monday after the bank decided to stop the issuance of new co-branded credit cards under the partnership with Bajaj Finance. The stock fell nearly to Rs 147.50 on the Bombay Stock Exchange, marking its lowest level since May 2023. However, the shares recovered later in the day closing at Rs 156 apiece, registering a gain of 0.6%.
According to a senior official of RBL Bank, the discontinuance of issuance of cards with Bajaj Finance will not significantly change the bank’s plans for its credit cards business.
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“RBL Bank and Bajaj Finance 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,” RBL said in a statement on Friday late evening. “It was therefore decided to stop issuance of new co-branded credit cards under this partnership,” it added.
The decision to end the partnership and reduce its reliance on Bajaj Finance is a part of the bank’s effort to grow its business via a higher mix of direct channels as well as newer partnerships, said analysts.
Out of 23 analysts tracking the company, 11 maintained a ‘buy’ rating, six recommended a ‘hold’ and six suggested ‘sell’, according to Bloomberg data.
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“The bank does not anticipate any significant impact on profitability due to this decision and has guided to grow the card business at 10-15 per cent as it aims to recover the lost volumes by 4QFY25 itself,” said Motilal Oswal Financial Services in a report. “The management suggested that the bank is witnessing improved asset quality in this business and expects normalization in the coming quarters,” it said. The brokerage maintained ‘Neutral’ on the stock with a revised target price of Rs 170.
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