Buy RBL Bank; target of Rs 125: Emkay Global Financial

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Emkay Global Financial's research report on RBL Bank

RBL Bank is expected to adopt a more calibrated-growth approach in FY23 and beyond, unlike in the past. The bank expects ~15% (+/-10%) growth in FY23 on a low base, but estimates sustainable growth of 20-25% thereafter. The focus, hereon, will be on delivering diversified & granular growth with higher share of secured assets. That said, the bank remains determined to re-accelerate growth in the cards business, while MFI book deceleration is largely behind. To de-risk the card portfolio being highly dependent on BAF (76% of CIF), the bank is entering into multiple co-branding/sourcing partnerships. On the secured retail front, focus will be more on mortgages/vehicle loans, while the bank would also build a healthy SME portfolio to improve the asset-portfolio tenure and support CASA mobilization.

Outlook

We also take comfort from bank’s higher capital level (Tier I -16%). Thus, we recommend Buy on RBL Bank, for investors who are ready to see through the near-term transitional pain for reaping gains in the long term.

More Info

At 11:28 hrs RBL Bank was quoting at Rs 103.05, up Rs 4.80, or 4.89 percent.

It has touched an intraday high of Rs 103.35 and an intraday low of Rs 98.00.

It was trading with volumes of 1,233,551 shares, compared to its thirty day average of 1,246,741 shares, a decrease of -1.06 percent.

In the previous trading session, the share closed down 1.60 percent or Rs 1.60 at Rs 98.25.

The share touched its 52-week high Rs 221.20 and 52-week low Rs 74.15 on 10 November, 2021 and 20 June, 2022, respectively.

Currently, it is trading 53.41 percent below its 52-week high and 38.98 percent above its 52-week low.

For all recommendations report, click here

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RBL Bank - 230822 - emkay