Buy RBL Bank; target of Rs 415: ICICI Direct

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26 Aug, 2025 12:21

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Our meeting with RBL Bank’s (RBL) MD&CEO further cements our positive stance on RBL. We believe the proposed USD 3bn capital infusion (link) from Emirates NBD (ENBD) catapults RBL several notches up in terms of net worth, CET1, technology offering, funding competitiveness and distribution, thereby securing huge growth runway. Pro forma RoA should rise to a different orbit of >1.5%, though RoE would likely be in single digit weighed down by low leverage. Under the proposed transaction, RBL aims to operate as subsidiary of ENBD while remaining listed. The management is hopeful of getting requisite approvals. NIM and RoA have bottomed out. MFI should sustain QoQ growth along with improvement in slippages. Credit card slippages may remain elevated but the book should see growth reviving to ~7-8% YoY by FY26 vs negative now. RBL offers attractive risk rewards with strong upside but limited downside due to impending open offer. BUY.

We retain BUY and our TP of INR 415, implying >35% upside. We believe RBL offers attractive risk returns, given little downside with an INR 280/share impending open offer.

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