RBL Bank jumps 6% after analyst meet

Shares of RBL Bank rallied 6 percent in early trade on June 1, post an analyst meet. At 12:43 pm the RBL Bank stock was trading 5.34 percent higher at Rs 170.75 on NSE.

According to a corporate filing on 31st May 2023 with the NSE, the RBL bank disclosed that they have conducted an analyst meet with Dimensional Securities Private Limited in Mumbai. Recently, the private sector lender has also reported their Q4 results.

R. Subramaniakumar, Managing Director and CEO of the RBL bank, during the earnings conference call stated that, “At the start of the year, we had planned for 15 percent growth in advances and annualized growth in our retail business of 20 percent this fiscal. I’m happy to report that we have ended FY ’23 with 17 percent Y-o-Y growth and a 5 percent sequential growth in advances.”

He further discussed that, “retail advances grew by 21 percent Y-o-Y, and 8 percent sequentially. The wholesale advances grew 13 percent Y-o-Y, and 2 percent sequentially. We had planned to grow the commercial banking business within the wholesale business, and this segment grew 19 percent Y-o-Y and 4 percent sequentially. Momentum in the retail businesses has continued to improve with every passing quarter. Our disbursals across all our retail businesses, other than the cards was approximately INR4,400 crores this quarter as against INR2,700 crores last quarter.”

RBL Bank Q4 Results

The bank reported a rise in net profit in the January-March quarter on the back of higher core income, other income, and lower provisions. The bank’s net profit for Q4 FY23 was Rs 271 crore, up 36.8 per cent year-on-year.

Its net profit was at Rs 198 crore in Q4 FY22. Its profit after tax (PAT) was 30 percent on a quarter-on-quarter basis.  The net interest income (NII), or core income, for the bank, rose 7 percent from a year ago and was at Rs 1,211 crore. NII rose 5 percent Q-o-Q. The net interest margin for the quarter stood at 5.01 percent.

Brokerage Commentary

Brokerage firm Emkay global financial has given a ‘buy’ rating to the RBL bank with a target price of Rs 225 per share in a recent report. On the outlook for the stock the firm stated that, “The stock is currently trading at lower valuations of 0.7x FY24E ABV/0.6x FY25E ABV, (adjusted book value) largely ignoring the broader recovery and growth potential under the new management. We retain BUY with target price of Rs225/share, based on 0.9x FY25E ABV.”

Brokerage firm HDFC Securities whereas has given a ‘reduce’ rating to the stock with a target price of Rs 135. The outlook given by them is that “given RBK is in an investment phase, opex (branches, people, new businesses) and lagged deposit repricing are likely to keep return ratios muted; maintain REDUCE with revised target price of Rs 135 (0.6x Mar-25 ABVPS).”

Stock Performance

RBL Bank has significantly underperformed the benchmark Nifty bank index over the last 5 years. The stock has lost 67 percent of its value over the last 5 years. Nifty Bank index whereas has given a return of 63.70 percent during the same duration.

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