Ambit is one broker whome report you would not Like to take at face value. They are over all bearish on India, since ages. ESOPs are a common phenomenon in growth companies, Amazon does it for even its foot soldiers. Management will have a bigger interest in growth of company if they have Esops.
There is no denying that Ambit is quite bearish. However, the fact red flagged is correct. 3.4 million shares in 4 months, this run rate gives 1 crore shares a year just as esop… this is very large dilution… and this is set to continue for 3 years…
In the last 5 years they issued 36 Million shares under ESOP. Almost 10% of their current shares outstanding and 15% of their shares outstanding 5 years ago. That shows who has the bigger bargaining power (employees vs equity holders).Their ESOP is like that of a silicon valley startup. Moreover, managers with a strong incentive to push stock price higher is not a good thing for a bank as decision making is decentralized in a bank and employees can push loans to grow the loan and interest income until the whole castle in the air comes crashing down.
@Yogesh_s there can be always two sides to it. One you have noted but other thing is the employees will also get motivation to work and get more business which will also help organization to grow they are working in.
Negative points are welcome as we will always ensure our investment hypothesis is right or wrong. I am also trying to search how this bank is growing at rapid space wherein other banks are struggling to post good results and manage the NPAs.
Disc: Invested in RBL Bank
RBL Bank on track to meet to 35% loan growth guidance: CEO
I have listened to last two con calls. The management sounds a little over confident. I may be wrong in my assessment though.
On the other hand , banks like indusind, lakshmi vilas bank very conservative/balanced views.
@Rahulj , one small question. where can we find out the ESOP to total shares ratio?. sorry if its a basic question.
In the annual report generally. But RBL listed this year to you will get in next years annual report. You can go through the DRHP it should have it. Additionally the 3.5 million esops post listing i calculated from BSE announcements.
RBL loan growth is mainly due to corporate loan. Bank which has high growth based on corporate loan growth there will always high NPA issue. Just look back at AXIS Bank growth history and current burden of NPA. I would prefer reasonable growth rate with more weightage on retail loan growth.
Euphoria of RBL is already priced. At this price margin of safety is not there.
70% of employees have ESOPs. But there is another side side of argument. When talent becomes one of differentiation and you do not have size or scale to fight, how do you bring and retain talent? Sometimes, there is no clear black or white and it has to be seen on case by case basis.Disc: invested
However, bigger worry could be how come RBL , Yes despite of lending to traditionally high risk areas are able to manage their numbers. to much of denominator base fueled by growth?
Motilal Oswal Results analysis - Strong performance in a tough environment; Asset quality impeccable:
Be cautious when you take Motilal Oswal’s guidance and price target as letter and spirit!. Refer their past holding of Interglobe aviation and price target. I dont’ think Motilal follow “Buy Right and Sit Tight” when it comes to their MF holdings. Too much turnover!!
While no one knows what will happen in long term, in near term the management is performing in line , infact beating the Vision 2020 targets they have set. That needs to be appreciated. My views may be biased as I have a holding in this.
Disc: Not invested.
The guy that wrote this doesn’t know what it takes to attract high quality talent from foreign banks.
ESOPs are a lot better than paying huge bonuses every year like many banks do, what matters with options is the strike price and vesting period.
It is good that their chief risk officer has a high number of options and not the guy trading derivatives.
This seems to be the reason for big recent run-up, although not sure if its good or bad it it really happens.
After IndusInd Bank, RBL enters race for merger with Bharat Fin
The company has informed exchange that the news item is speculative and it has not considered any strategic investment at this point.Guess this will pull down the stock.
Well bank would need more capital next year, so a QIP could be one of the way which could take place between 500-550. At the current price the stock is richly valued however one should never underestimate the market forces. It worth to have such stocks where the growth is the highest in the industry at least for the next 2-3 years.
Disclosure - Holding since pre IPO.
In an interview with CNBC RBL Bank’s CEO Vishwavir Ahuja
RBL Bank CEO on bank’s growth, Operating Effciency to be improved going forward
is it a good time to enter RBL? it is constantly rising since last 3 quarters.