Buy RBL Bank; target of Rs 270: Dolat Capital Market

Dolat Capital Market's research report on RBL Bank

RBL’s Q3 earnings were impacted by high provisions led by elevated write-offs. Other income benefitted from healthy recoveries from written-off accounts, aiding core PPoP metrics which stood at 3.3%. NIM were stable QoQ at 4.2% after the impact of high interest reversal and compound interest waiver.

Outlook

We value the bank at 1.1x FY23E ABV, maintaining our BUY rating with an TP of Rs270. Despite near term challenges on asset quality front, we derive comfort from the bank’s improving growth prospects and superior digital capabilities in mid-sized banking space. Valuations remain undemanding, with the stock trading at 0.7x FY23E ABV.