Buy RBL Bank; target of Rs 220: Motilal Oswal

Buy

Motilal Oswal's research report on RBL Bank

RBL Bank (RBK) reported 4QFY25 PAT of INR687m (81% YoY decline). NII declined 2.3% YoY to INR15.6b (in line) due to lower disbursals in the JLG business. NIMs remained broadly stable at 4.89% during the quarter. Advances grew 10.3% YoY/2.4% QoQ, while deposits grew 7.2% YoY/3.9% QoQ. The CASA mix increased 130bp to 34.1%. The C/D ratio stood at 83.5%. Fresh slippages stood at INR10.6b vs INR13.1b in 3QFY25 and INR10.3b in 2QFY25. GNPA moderated 32bp QoQ to 2.6%, while NNPA improved 24bp QoQ to 0.29%. PCR increased to 89%. We increase our EPS estimates by 12% each for FY26/FY27, as business growth is gaining traction and slippages are expected to normalize by 2QFY26.

Outlook

We also estimate the C/I ratio to improve to 61% by FY27. we estimate FY26E RoA/RoE at 1.2%/12.8%. We upgrade RBK from Neutral to Buy with a TP of INR220 (premised on 0.8x FY27E ABV).

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RBL Bank - 28042025 - moti