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.
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