Comments
Centrum Wealth Research
RBL Bank (Buy)
CMP: ₹526
Target Price: ₹600
RBL Bank maintained stable NPAs. Gross NPA at 1.40%, as of 30 Sept’18 along with continued robust advances growth of 36.6 per cent YoY. The net interest income (NII), pre-provisioning profit (PPP) and net profit grew 41.1 per cent, 48.1 per cent and 35.8 per cent, respectively, on YoY basis in Q2FY19.
Overall business grew 33.5 per cent to ₹93,663 crore as on 30 Sept’18. As a big relief from one of the major concerns, the management clarified that their total direct exposure to IL&FS close to mere ₹15 crore as a performance guarantee which is fully cash collateralised.
Post our last update (Q1FY19 on 27 July @ ₹568), the stock of RBL Bank declined 23 per cent to a low of ₹439 per share. However, post the good results, the same has recovered ~17 per cent and is now trading at 3.0x/2.6x its FY19E/20E adjusted book value.
Further decline in NPAs and robust business growth - CAGR of 37% over FY18-20E, are expected to improve return ratios –1.51% RoA and 18.2% RoE by end FY20E. Hence, we remain positive on the stock of RBL Bank, with a target price of ₹600, valuing it at 3x its FY20E ABV.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.