Shares of RBL Bank slumped nearly 6 percent on January 20, bogged down by the lender's dismal earnings performance in the October-December quarter. The lender's net profit for the quarter under review crashed 86 percent to Rs 32.60 crore, a sharp downturn from the Rs 233.10 crore that it clocked in the same period last fiscal.
Net interest income reported a tepid growth of just 2.5 percent on year to Rs 1,585 crore. While net non-performing asset (NPA) ratio fell to 0.53 percent in Q3 as against 0.79 percent in Q2, the gross NPA ratio rose to 2.92 percent, up from 2.88 percent in the last quarter.
Net interest margin also squeezed on quarter to 4.9 percent in Q3 as against 5.04 percent in Q2. Additionally, provisions also surged to Rs 1,188.90 crore in Q3, up from Rs 618 crore in Q2 and Rs 458 crore in the same quarter last fiscal.
At 10.25 am, shares of RBL Bank were trading at Rs 155.02 on the NSE as it recouped most of its intraday losses from its day's low of Rs 146.10.
Follow our market blog to catch all the live action
Brokerage firm Emkay Institutional Equities touted RBL Bank's Q3 performance as a clean up act, which it expects to continue in Q4 as well. On that account, Emkay trimmed its FY25, FY26 and Fy27 earnings estimates for the lender by 33 percent, 12 percent and 7 percent, respectively. The brokerage also slashed its price target for the stock by 10 percent to Rs 225, but retained its 'buy' call on RBL Bank.
Despite that, Emkay recommended the stock to investors who were willing to trade the near-term pain for its long-term gains.
On the other hand, Nirmal Bang Institutional Equities downgraded RBL Bank to a 'sell' call, cutting its price target by over 16 percent to Rs 144. The brokerage estimates a lower loan CAGR of 11.8 percent for the lender over FY24-27 and anticipates higher credit costs of 2.9 percent during the same period.
It also reduced its profit estimates for RBL Bank by 39.6 percent, 20.4 percent, and 11.7 percent for FY25, FY26, and FY27, respectively. "The stock is expected to face continued pressure in the near-to-medium term due to challenges in the microfinance and credit card segments, with additional stress in the unsecured portfolio likely keeping credit costs elevated," the brokerage stated.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to consult certified experts before making investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
