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Buy RBL Bank; target of Rs 573: HDFC Securities

HDFC Securities is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 573 in its research report dated April 23, 2018.

April 24, 2018 / 05:14 PM IST
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HDFC Securities' research report on RBL Bank

RBL Bank (RBK)  is India’s fastest growing private sector bank (~59% loan CAGR over FY10-17). It is adequately diversified across geographies and has a  reasonable  fix  on  asset  quality. Beyond its corporate focus, RBK has selectively  ventured into retail segments with high growth potential. With a well capitalised B/S, RBK is set to make the most of receding competition from corporate lenders (esp. PSUs) Strategic  clarity,  tight  execution and superlative growth off a low base make  RBK  attractive  for  long  term  investors. The rising share of high yielding  retail  loans  will  fatten NIMs (est. +51bps in FY17-20E). While expanding  fee  streams  and  the  ability to tweak SA rates are key profit levers,  RBK’s high (and well directed) spend on people and technology will limit  oplev  for  now. Our conservative cost and provision estimates still provide upside risk to earnings.


Initiate  coverage with a BUY. Our TP of Rs 573 is based on a 3x Mar-20 ABV of Rs 191. RBK’s underperformance (-24% relative to the Bank Nifty over the last year) makes for a good entry point.

For all recommendations report, click here

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first published: Apr 24, 2018 05:14 pm

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