HDFC Securities is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 582 in its research report dated April 28, 2018.
HDFC Securities' research report on RBL Bank
RBL Bank (RBK) delivered across parameters, again. Best-in-class growth (+37% YoY) and robust fees (+33%) drove net earnings (~Rs 1.8bn, +37% YoY). NIM jumped for the 8th successive quarter, just shy of 4% (up 46/9bps YoY/QoQ) with the retail thrust. Asset quality healed, barring agri loans. RBK beefed up coverage (~57.6%, up ~400bps QoQ) even as net stress dropped 29bps to 0.86%. Solid CASA accretion (+41% YoY) continued, with differential SA rates. Customer acquisition was robust (4.5mn total).
OutlookAs high-yielding retail loans rise and the lucrative BBB vertical expands, an uptick in profitability is inevitable. We have factored in a 6bps jump in RoAA over FY18-20E. Maintain BUY with a TP of Rs 582 (3x Mar-20E ABV of Rs 194).
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