RBL Bank share price fell 2 percent in the early trade on August 3 after the company declared its June quarter earnings.
On August 2, the company reported a loss of Rs 459.47 crore for the June quarter as against a profit of Rs 141 crore in the year-ago period as the money set aside for future loan setbacks shot up by nearly three-times.
The bank said 97 percent of its overall gross slippages of Rs 1,342 crore came from the retail segment which got hit because of the impact of the second COVID wave.
Its gross non-performing assets ratio increased to 4.99 percent as of June 30 as against 4.34 percent in March and 3.45 percent in the year-ago period.
The overall provisions rose to Rs 1,425 crore from Rs 500 crore in the year-ago period, majorly on the back of an accelerated provision of Rs 365 crore to drive up its provision coverage levels and Rs 235 crore set aside for COVID-related setbacks.
For the reporting quarter, the net interest income declined 7 percent to Rs 970 crore as the loan book remained flat and the net interest margin narrowed sharply to 4.4 percent from 4.9 percent in the year-ago period.
Here is what brokerages have to say about the stock post the earnings announcement:
CLSA | Rating: Buy | Target: Rs 240
CLSA has kept a buy rating on the stock for its undemanding valuation. But looking at the peers, it prefers ICICI Bank, Axis Bank and SBI.
With lower growth & an increase in provisions, see negligible profit in FY22.
CLSA cut FY23 estimate by 11% as the near-term uncertainty remains high.
The normalisation of its earnings will likely playout only in FY23.
Motilal Oswal | Rating: Buy | Target: 235
RBK reported a weak quarter on higher slippage and accelerated provisions towards the unsecured portfolio.
Business growth remained muted even as margins witnessed sequential improvement.
Motilal Oswal cut earnings estimates sharply by 72% for FY22, factoring in higher credit costs (5.3%) and subdued loan growth.
It expect the bank to deliver FY23E RoA/RoE of 1.3%/11.6%.
At 09:22 hrs RBL Bank was quoting at Rs 191.90, down Rs 2.55, or 1.31 percent on the BSE.
The share touched a 52-week high of Rs 274 and a 52-week low of Rs 156 on 08 January, 2021 and 24 September, 2020, respectively.
Currently, it is trading 29.96 percent below its 52-week high and 23.01 percent above its 52-week low.With inputs from PTI