M&M to not increase stake in RBL Bank until it sees 'compelling strategic value'
The automaker had acquired a 3.5 percent stake in RBL Bank for Rs 417 crore last week and had mentioned that 'under no circumstances' would the stake go beyond 9.9 percent.
Mahindra & Mahindra Ltd. does not plan on increasing its stake in Mumbai-based private lender RBL Bank Ltd. unless it sees compelling strategic value at some point in the future.
The automaker had acquired a 3.5 percent stake in RBL Bank on July 26 for Rs 417 crore last week and had mentioned that 'under no circumstances' would the stake go beyond 9.9 percent. The acquisition was a confirmation of a CNBC-TV18 newsbreak from earlier in the day.
"Our capital allocation framework remains unchanged," the company said, adding that the investment is based on a long-term view of seven to ten years with a primary purpose to understand banking.
MD & CEO Anish Shah said that the RBL Bank investment is for the company to understand banking in a lot more detail. "At this stage, we will not raise stake further in RBL Bank," Shah said.
"We saw an opportunity with an attractive valuation at less than 1 times price-to-book for a very solid bank with a strong management team," M&M said. It is also looking to explore potential synergies with RBL Bank.
Shares of Mahindra & Mahindra are trading 0.5 percent lower at Rs 1,461.90, while those of RBL Bank are trading 2.1 percent lower at Rs 216.55.
First Published: Aug 4, 2023 2:49 PM IST
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