HDFC Securities is bullish on RBL Bank has recommended buy rating on the stock with a target price of Rs 618 in its research report dated October 23, 2018.
HDFC Securities' research report on RBL Bank
RBK’s 2Q was impressive with industry leading broad based growth (37%), strong fee traction (+61%), 7th consecutive qtr of sequential NIM (4.08%) improvement and stable asset quality (net stressed book at a mere 80bps). The sustained NIM uptick was on account of MCLR reset and increase in the share of the high yielding retail portfolio. The steep rise in other opex (11% QoQ) was due to the cards business and restricted oplev improvement (Core C-I at 51.9%, -110bps). PCR further improved to 61.5%, (+110bps QoQ) despite flat provisions.
Outlook
Despite this, we expect RBK to report an RoAA of 1.34% (up from 1.15% in FY18). In spite of the inevitable fund raise in FY20 we have not incorporated it into our assumptions. Maintain BUY with TP of 618 (3xSept-20E ABV of Rs 206).
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