Geojit Financial Services is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 591 in its research report dated August 01, 2017.
Geojit Financial Services' research report on RBL Bank
RBL Bank’s net advances continued to witness strong growth of 40% YoY mainly driven by higher growth (↑44% YoY) in non-wholesale loan book. The non-wholesale loan book growth was mostly driven by Business and Branch Banking (↑63% YoY) division. Wholesale loan book also grew at a strong pace of 37% YoY. Within the wholesale segment, corporate & institutional banking grew by 47% YoY and commercial banking increased by 18% YoY.
Overall, higher earnings growth, steady asset quality, improving business mix and above industry average loan growth will help the bank to sustain premium valuations over new generation private sector banks. Thus, we upgrade our rating to Accumulate from Hold on the stock with a revised upward target price (TP) of Rs 591 (P/ABV of 3.5x for FY19E). Notably, the bank raised capital to the extent of Rs 1,680cr on a preferential basis at a price of Rs 515 per share in July 2017. Hence, we have incorporated it in our model.