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Last Updated : Apr 23, 2019 04:34 PM IST | Source: Moneycontrol.com

Buy RBL Bank; target of Rs 753: Cholamandalam Securities

Cholamandalam Securities is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 753 in its research report dated April 22, 2019.

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Cholamandalam Securities' research report on RBL Bank


RBL’s advances grew by 34.9% YoY to INR 543.1bn in 4QFY19. The growth predominantly came from Retail assets (68% YoY), DB&FI segment (34% YoY) and C&IB segment (32% YoY).The wholesale & retail mix remained at 56% and 44% respectively. Based on their internal ratings, ~96.9% of the advances is offered to BBB- or higher rated borrowers. The management expects loan book to grow at 30-35% till FY20E. Deposits grew by 33% YoY to INR 584bn supported by increase in CASA base. CASA deposits grew by 36.8%YoY taking CASA ratio to 25% from 24.3% in 4QFY18. The management reiterated that it retains a targeted growth of 0.75-1% every year, till FY20E in CASA ratio. The digital acquisition channel now contributes 40-50% of new (deposit) account openings, implying granularity in funding profile coupled with low cost of acquisition.


Outlook


Robust loan growth trajectory and well-maintained asset quality coupled with healthy margins, rapidly growing fee income and expected improvements in opex due to technological up gradation, gives a positive outlook for the bank. Hence, we give the stock a BUY rating, with a target price of INR 753 valuing at 3.1X of FY21E P/ABV.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

First Published on Apr 23, 2019 04:34 pm
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