RBL Bank shares transform from laggard to multibagger, surge 105% in eight months – What's behind the rally?

At the start of 2025, investors were cautious about a recovery in RBL Bank share price following their prolonged underperformance, with most choosing to exclude the stock from their portfolios, doubting any rebound.

However, those who continued to hold have witnessed massive wealth creation, as the RBL Bank share price staged a stellar rally in recent months, making it a top performer among the banking stocks.

The shares of the private sector lender have surged from their February lows of ₹149 apiece to the current level of ₹305, delivering a massive gain of 105%.

RBL Bank share price has closed higher in seven of the past eight months, marking its biggest sustained rally since listing in 2016 and establishing it as one of 2025’s most notable turnaround champions.

The recent upswing has also lifted the shares to their highest level since March 2020, pushing year-to-date returns to 90%, the strongest calendar-year performance in the past nine years.

Although RBL Bank's share price had seen a massive turnaround, it is still down by 57% from its record high of ₹716.55 apiece, clocked in May 2019.

Key triggers for turnaround in RBL Bank's stock

RBL Bank shares have gained momentum following a sharp improvement in financial performance in recent quarters, including better asset quality, while the rally received additional support from reports that Dubai-based Emirates NBD, is looking to acquire a majority stake.

Emirates NBD is eyeing a 60% stake in Mumbai-based RBL Bank, after accounting for the mandatory open offer, CNBC TV18 reported on Wednesday, citing sources.

The bank is likely to acquire shares through a fresh equity issuance to its wholly owned subsidiary, which would mean that the entire investment is directly infused into RBL Bank. The deal, expected to be announced in the coming days, has received informal approval from the Reserve Bank of India (RBI) for a change of control, the report said.

It further noted that, if completed, the transaction would mark the largest single foreign direct investment (FDI) in India’s banking sector. The development comes months after the RBI granted Emirates NBD in-principle approval in May 2025 to establish a wholly owned subsidiary in India.

The Reserve Bank of India (RBI) has increasingly encouraged foreign investment to strengthen mid-sized banks, as seen in its approval of Japan’s Sumitomo Mitsui Banking Corporation (SMBC) acquiring a 24.9% stake in Yes Bank in August.

Mutual funds, FPIs increase stake in RBL Bank

Domestic mutual funds significantly boosted their holdings in RBL Bank during the June quarter, with their collective stake rising to 29.18% from 15.27% in Q4 FY25. Life Insurance Corporation (LIC) also added to its exposure, holding 1.27% at the end of Q1.

Foreign portfolio investors (FPIs) increased their stake to 17.6% in Q1 from 14.4% in Q4 FY25, while general shareholders continue to hold a majority of 47.7%, although this declined from 64.4% in the previous quarter.

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