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Last Updated : Jan 23, 2017 04:33 PM IST | Source: CNBC-TV18

Hold RBL Bank for long term, says Mayuresh Joshi

Mayuresh Joshi of Angel Broking recommends holding RBL Bank for long term.

Mayuresh Joshi of Angel Broking told CNBC-TV18, "I think the performance of RBL Bank was quite exemplary in terms of how the advances book have grown. However, largely, one must really understand that it has come off a very low base. So, at the end of FY'16, the local advance book stood somewhere around Rs 21,300 crore. Their deposit book was somewhere around Rs 24,300 crore and they have been growing this book at 50 percent on a compounded basis for the past few years." 

"Having said that, the kind of accomplishment in terms of maintaining the asset quality as well as the net interest margins (NIMs) and again the credit cost not expected to be too alleviated, pin points that the bank is doing well and in the right direction when it comes to how the advance growth has been panning out. When it comes to valuations, I think post the IPO and the listing price it was around 2.1 times price to adjusted book. It is way ahead of that at this point in time," he said.

"Though capital adequacy at almost 12.9 percent odd will fuel balance sheet expansion, the way the management is perceiving in excess of 30-35 percent odd. My own sense is that valuations appear a little bit expensive at this point in time. So, very difficult to comprehend a buy at these levels. However, investors holding on should definitely hold on to the bank because in the next four quarters, the loan growth will be better than industry and because of the base that they are working on with." 

"I think the asset quality pressure should not be that evident specifically for RBL Bank vis-à-vis the entire system as working capital constraints for metal mining starts easing off, credit growth picks up and again capital adequacy will hold the bank in a good sense. So, it is a clear hold from my side for existing long-term investors."
First Published on Jan 23, 2017 04:05 pm
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