Buy RBL Bank, target price Rs 230: Motilal Oswal

Motilal Oswal has given a buy rating to RBL Bank with a target price of Rs 230. The share price moved up by 0.45 per cent from its previous close of Rs 177.10. The stock’s last traded price is Rs 177.90.

RBL Bank Ltd., incorporated in the year 1943, is a banking company (having a market cap of Rs 9065.75 Crore).

Financials
The Bank reported a Gross Non Performing Assets (Gross NPAs) of Rs 1992.07 Crore (.00 % of total assets) and Net Non Performing Assets (Net NPAs) of Rs 932.68 Crore (.00% of total assets).

For the quarter ended 30-06-2020, the company reported a Consolidated Interest Income of Rs 1885.82 Crore, up .34 % from last quarter Interest Income of Rs 1879.44 Crore and up 12.32 % from last year same quarter Interest Income of Rs 1679.01 Crore. The bank reported net profit after tax of Rs 154.42 Crore in latest quarter.

Investment Rationale
RBL reflected weak advances growth, led by decline in the wholesale portfolio. On the other hand, the retail portfolio reflected strong sequential growth. It believes the uptick in retail growth would be led by MFI and Credit Cards. Also, credit card growth at the systemic level stood at ~13% QoQ. The bank reflects strong traction in garnering CASA deposits. On the asset quality front, it expects slippage trends to remain elevated in the unsecured and BB & below rated portfolios. Thus, credit cost would remain high at 3.7% for FY21E.

Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of June 30, 2020, while FIIs held 29.3 per cent, DIIs 22.5 per cent and public and others 48.3 per cent.