Emkay Global Financial's report on RBL Bank
Despite subdued business growth, RBL reported a PAT of Rs1.4bn (est: Rs0.9bn), aided by low opex and contained provisions. The GNPA ratio declined 17bps qoq to 3.5%, while the bank improved its specific PCR to 53% (up 900bps qoq). Loan growth remains subdued due to Covid-19-led disruptions and continued de-bulking of the corporate book. However, the bank has recovered from the deposit scare in Q4, with 7% qoq growth and CASA touching 30% for the first time. The overall moratorium rate fell to 13.7% from 33% in value terms, but remains sticky for Cards at 22%. Cumulative contingent provisions now stand at Rs3.5bn (up Rs2.4bn during Q1), 60bps of loans, which we believe need to be further accelerated.
We retain the Hold rating with a revised TP of Rs195, based on 0.8x Sep FY22E ABV. With the deposit scare largely behind, we believe that the stock will now largely track the asset quality performance, with risk on its retail book likely to remain higher.
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