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Buy RBL Bank; target of Rs 584: HDFC Securities

HDFC Securities is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 584 in its research report dated July 20, 2018.

September 18, 2018 / 02:24 PM IST
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HDFC Securities' research report on RBL Bank

It  was  a  quarter full of positives for RBK with robust loan growth (+36% YoY),  steady  asset  quality  (GNPAs  flat  at  1.7%)  and superlative fee traction  (+59%  YoY),  owing to cards. The steady uptrend in retail yields (+110bps  YoY)  drove  up  NIM to 4.04% (+50bps YoY), despite the continued pressure  on  corporate  yields (-70bps YoY). RBK’s tight grip on costs was visible  as  sequential opex growth at ~4% was significantly lower than the trailing 8-qtr average of ~9%.  Industry  leading  growth  (albeit  on  a  smaller  base), improving margin trajectory  and  a  tight fix on asset quality drive our positive stance on RBK.  We  believe  improving  retail  profitability, uptrend in margins and better oplev will push return ratios upwards (19bps over FY18-20E).


While capital (Tier 1 of 13.1%) is not a hindrance in the near term, a book accretive fund raise will create comfort on valuations. Maintain BUY with a TP of Rs 584 (3x Mar-20E ABV of Rs 195).

For all recommendations report, click here


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Broker Research
first published: Jul 26, 2018 04:48 pm

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