RBL Bank rallies 4% even after Q3 profit misses estimates, Morgan keeps ‘underweight’ tag

RBL Bank’s October-December standalone net profit grew 12 percent YoY to Rs 233 crore. But, excluding the contingent provision on AIF investment of Rs 115 crore, net profit swelled 53 percent YoY to Rs 319 crore.

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Shares of RBL Bank rose over 4 percent in early morning trade on January 20 after the bank declared its fiscal third-quarter results, which missed the projections made by the Street. At 9:20am, the stock was trading at Rs 277.

RBL Bank’s October-December standalone net profit grew 12 percent YoY to Rs 233 crore. But, excluding the contingent provision on AIF investment of Rs 115 crore, net profit swelled 53 percent YoY to Rs 319 crore. The bank has put aside Rs 115 crore for the provision on AIF investments. The net interest income increased 21 percent on-year to Rs 1,546 crore; while net interest margin widened to 5.52 percent.

Morgan Stanley gave an ‘underweight’ call on the bank, saying that profitability recovery will be gradual and reduced the FY24 and FY25 estimates based on the one-time contingency provisions. The brokerage has a target price of Rs 250 on RBL Bank, a downside of 3 percent from previous day’s close.

According to the brokerage, the core PPoP of the bank grew 40 percent YoY and is 3 percent above their estimate. The growth in net interest income and fee income were strong YoY while the margin missed their estimates by 8 bps. The brokerage expects the retail loan growth to remain strong for the bank.

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