Motilal Oswal is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 650 in its research report dated January 28, 2019.
Motilal Oswal's research report on RBL Bank
RBL's 3QFY19 PAT was in line, increasing 36%/10% YoY/QoQ to INR2.25b (MOSLe: INR2.3b). NII grew 40% YoY to INR6.5b led by 35% YoY advances growth and 4bp QoQ expansion in margins to 4.12%. During 9MFY19, PPoP grew by 46% YoY, while PAT grew 36% YoY. Core fees grew 50% YoY (100% YoY growth in card fees). Strong opex control enabled 50% YoY growth in PPoP while C/I ratio stood stable at 51.6%. Loan book grew 35% YoY led by strong growth in retail book (51% YoY). The share of retail loans increased 206bp QoQ to ~43%. CASA deposits increased 38.5% YoY (9.6% QoQ) led by robust 56% YoY increase in CA deposits. CASA ratio improved 60bp YoY to 24.6%.
We tweak our estimates for FY19/FY20 by -1.2%/+1.6% and estimate RBK to report RoA/RoE of 1.3%/17.6% by FY21. Maintain Buy with a revised TP of INR650 (3.2x Sep-20E ABV).
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