Buy RBL Bank; target of Rs 194: LKP Research

LKP Research is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 194 in its research report dated May 02, 2023.

Broker Research

May 03, 2023 / 12:07 IST

Buy

26 Aug, 2025 12:21

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LKP Research's research report on RBL Bank

The quarterly performance of RBL Bank is showing signs of recovery. The important positive pointers are 1) GNPA (3.37%) inched down sequentially by 24bps driven by stable slippages and higher upgrades and recoveries, 2) Restructured book (1.21% of GCA) also decreased, with 13% coverage, 3) Provision expenses (₹2.3bn v/s ₹2.9bn) down sequentially; with stable PCR of 68%. 4) Non-specific PCR 0.69bps of loan is at satisfactory level, 5) NIMs improvement of 32bps on the back of healthy YoA, 6) NII growth (7.1% YoY) below compared to credit growth (17% YoY). However the negatives are a) PPOP de-growth because of higher operating expenses (C/I: 68.5%) led by cards expenses followed by branches and technology. Nevertheless, the bank’s latest business growth strategy around ramping up cards acquisition will entail significant operating expenses, which is expected to keep profitability under pressure in the near-to-medium term. Management achieved its previous guidance to exit FY23 with ROA of 1%. Furthermore, Management alluded to FY26 goals to grow business (Loans + Deposits) at a CAGR of ~20% and expects PPOP growth to be higher than loan growth.

Outlook

RBL Bank is showing signs of recovery by 1) adequate provisioning, 2) improved PCR, 3) healthy liquidity position with LCR of 126%, and 4) returning to growth trajectory. We recommend a BUY on the bank with target price of ₹194.

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