RBL Bank Ltd. share price target

improvement of 20bp QoQ to 3.7%, driven partly by a reduction in cost of funds from CASA inflows and partly by capital from QIP. Absolute GNPAs increased 6% QoQ (+77% YoY) to 1.44% of loans (-2bp QoQ). Sequential decline in asset quality was caused by a 30%/20% increase in DB&FI;/BBB portfolios, where GNPA ratios stood at 2.81%/1.49% (+42bp/+8bp QoQ), while asset quality in Commercial Banking improved with a decline in GNPA to 2% from 2.6% in the earlier quarter. Loan growth was led by non-wholesale book growth of 41% YoY, increasing...

Net interest income (NII) increased at a robust pace of 55% YoY (in line with our expectation) on account of 69 bps YoY improvement in net interest margin (NIM) to 3.5% coupled with strong growth in advances. Other income grew by 53% YoY on the back of stellar growth in treasury (178% YoY) and distribution fees (158% YoY). Net profit grew at a slightly slower than expected pace of 45% YoY mainly due to 122% YoY increase in provisions owing to higher slippages from the micro finance institutions (MFI) portfolio. Going forward, we expect net profit to increase at a CAGR of 44% over FY17-19E led by better operating efficiency coupled with stable margin. Marginal hiccups in asset quality...

RBL Bank (RBL) continued its dominant show, reporting ~45% YoY PAT growth to Rs 1.4 bn (marginally higher than our estimate). Operating metrics were strong: 40%/37% growth in advances/deposits, sequentially resilient NIM (3.5%) and stable CASA ratio at 22%. However, headline asset quality witnessed ..

Background: RBL bank (RBL) came into operations in 1943 and was incorporated as a small, regional bank in Maharashtra with two branches in Kohlapur and Sangli. Post the change in the management team in 2010, it has been one among the fastest growing private sector banks and now has 244 interconnected branches and 387 interconnected ATMs spread across 16 Indian states and union territories serving ~3.15mn customers. The bank offers a comprehensive range of banking products and services customized to cater to the needs of large corporations, SMEs, agricultural customers, retail customers and development banking & financial inclusion (low income) customers. Loan book of the bank grew at a CAGR of 58% over FY11-17 and stands at INR 311bn...

BUY RBL Bank Ltd at CMP Rs. 381 and add on dips to band Rs. 352 - 381 for the target of Rs. 470

Background: RBL bank (RBL) came into operations in 1943 and was incorporated as a small, regional bank in Maharashtra with two branches in Kohlapur and Sangli. Post the change in the management team in 2010, it has been one among the fastest growing private sector banks and now has 197 interconnected branches and 362 interconnected ATMs spread across 16 Indian states and union territories serving ~1.9mn customers. The bank offers a comprehensive range of banking products and services customized to cater to the needs of large corporations, SMEs, agricultural customers, retail customers and development banking & financial inclusion (low income) customers. Loan book of the bank grew at a CAGR of 62% over FY11-16 and as of FY16 stands...

RBL Bank (RBL), formerly known as Ratnakar Bank Ltd is a Scheduled Commercial Bank (SCB). It is one of India's fastest growing Private Sector Banks. It offers a comprehensive range of banking products and services customized to cater to the needs of large corporates, small and medium enterprises (SMEs), agricultural customers, retail customers and development banking & financial inclusion (low income) customers. It has been expanding its presence across India through a growing network of branches and ATMs and upgrading its traditional delivery channels with...

We are bullish on the prospects of RBL Bank (RBL) given that the management has proven capabilities to build a world class franchise. And performance of the Bank over the period FY10-16 is testimony to its capabilities. Advances and deposits have grown at a robust pace of 62% & 58% respectively, while NII and earnings have followed suit growing at 55.1% and 58%. This scorching pace of growth has been without...

Strong management team & focused approach to drive growth: The new Management led by MD & CEO Mr Vishwavir Ahuja which took charge in 2010 has been instrumental in the outstanding growth of the bank over the years, wherein the bank transformed itself from being a traditional bank to a new age bank. RBL has been largely focusing on funding working capital to large and midsized corporates. It has recently ventured into retail lending by buying out the credit card business of Royal Bank of Scotland (RBS) and has been expanding its retail business by introducing other new retail-centric products.

Outlook and Valuation: Currently the stock is valued at 2.3x its FY2018E BV of `130; this we feel is quite attractive given the growth prospects of the bank. Changing business mix & stable credit cost are expected to lead to a predictable earnings growth. While the ROE improvement could be gradual, we believe absolute growth in earnings could accelerate going ahead. RBL in our view has all the ingredients to become a multi-year growth story with a stable asset quality. Keeping this in mind, feel the stock should be valued at 2.5x its FY2018E BV. They recommend ACCUMULATE on the stock with a target price of `325.