Buy RBL Bank; target of Rs 300: Emkay

Emkay is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 300 in its research report dated July 20, 2025.

Broker Research

July 22, 2025 / 13:36 IST

BUY

26 Aug, 2025 12:21

Volume

Todays L/H

Emkay's research report on RBL Bank

Despite slower credit growth and sharper margin contraction, RBL reported a 27% PAT beat at Rs2bn and 0.6% RoA, mainly due to higher treasury gains and contained provisions (50bps in Q1/2% annualized, including 6bps contingent provisions on JLG MFI loans). The higher margin contraction during 1Q (down 39bps QoQ) was mainly due to the impact of recent rate cuts, change in portfolio mix toward secured loans, and sticky funding cost. The bank expects NIM to remain under pressure in 2Q; however, it expects NIM to improve thereon. After consuming the contingent buffer in FY25, the bank has again started re-building buffer at 1% on JLG MFI loans; it still expects credit costs to ease gradually as Card/MFI stress moderates, thus enabling it to deliver ~1% exit RoA in 4QFY26. We cut our FY26E/27E EPS by 6%/5%, mainly due to lower margins; however,

Outlook

We expect the bank’s RoA to improve to 0.7-1.2% over FY26-28E, from 0.5% in FY25. We retain BUY, with an unchanged TP of Rs300, valuing the bank at 1x Jun-27E ABV.

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