Shares of RBL Bank Ltd climbed 4 per cent in Saturday's trade following the lender's December quarter results. Motilal Oswal said RBL Bank's results were in-line with its expectations, adjusted for one-off provisions pursuant to the recent RBI circular on AIF exposure, which led to a decline in earnings. The business is seeing healthy growth and the management anticipates the momentum to remain consistent, driven by retail loans, it said.
"Deposit growth was healthy, though the CASA ratio moderated. The bank has guided for advances growth of 20 per cent YoY, led by retail business. Deposits are also expected to grow at a similar pace. Asset quality remained stable with a decline in restructured book. We cut our FY24/FY25 earnings estimates by 10 per cent/9 per cent to factor in higher provisions/opex and estimate FY25 RoA/RoE of 1.1 per cent/10.3 per cent," it said while suggesting a target of Rs 270 on the stock. The RBL Bank scrip climbed 4.44 per cent to Rs 277.50 on BSE.
RBL Bank said its profit for the quarter was up 11.5 per cent at Rs 233 crore. Its gross non-performing assets (NPA) stood at 3.12 per cent, the same as 3.12 per cent in Q2FY24. The RBL Bank management is confident of achieving 5 per cent net interest margin (NIM) in FY24, driven by increasing share of retail advances. Advances and deposits growth is expected to be 20 per cent-plus each with a clear focus on retail advances and granular deposits.
NIMs are expected to stay in the similar range of 5.5 per cent. "Considering the bank’s exposure to unsecured credit, which can see a slowdown and incorporating the 3QFY24 results, we have tweaked our earnings estimates by 8.6 per cent/17.7 per cent for FY24E/FY25E.
"The developments at Bajaj Finance with respect to the recent regulatory restrictions and its impact on the bank’s growth will be another monitorable. We have revised our target price to Rs 271 (valued at 1x December 2025E ABV) from Rs 303 earlier (valued at 1.1x September 2025E). We have downgraded our rating from a ‘BUY’ to an ‘ACCUMULATE’," the brokerage said.
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