RBL Bank shares snap 4-day upmove, dive 4% today; here's why

RBL Bank Ltd shares paused their 4-session winning run on Wednesday as the stock tanked 4.10 per cent to close at Rs 249.30. The stock fell after the exchanges sought clarification from the company on its denial of a news report claiming that Dubai-based Emirates NBD Bank was considering acquiring a minority stake.

In a BSE filing, the lender said that the exchange has sought clarification from RBL Bank regarding a news article dated July 2, 2025, titled "RBL Bank shares drop 2 per cent after lender denies report on Dubai-based Emirates NBD Bank eyeing minority stake," adding that the response is awaited.

Despite today's drop, RBL Bank shares have rallied 57.98 per cent on a year-to-date (YTD) basis.

On the earnings front, RBL reported a substantial decrease in its financial performance for the fourth quarter of the fiscal year 2025. The bank's profit after tax (PAT) plunged by 80.5 per cent year-on-year (YoY) to Rs 69 crore.

Despite this, Geojit has upgraded RBL Bank's stock rating from 'Sell' to 'Accumulate', citing the bank's strategic focus on enhancing deposit granularity and expanding retail assets. The brokerage has set a revised target price of Rs 240, based on 0.8 times the FY27E book value per share. Geojit highlighted the bank's resilience in maintaining its branch network and customer engagement.

The bank's pre-provision operating profit fell by 2.9 per cent YoY to Rs 861 crore due to a 7.2 per cent increase in operating expenses. Although RBL Bank experienced a 4.1 per cent YoY growth in interest income, reaching Rs 3,476 crore, driven by gains in secured retail and wholesale loan segments.

Interest expenses, however, rose by 10 per cent YoY to Rs 1,913 crore in Q4 FY25. This increase in expenses was due to the elevated cost of deposits and funds, which resulted in a 2.3 per cent decline in NII to Rs 1,563 crore. The net interest margin (NIM) also slipped to 4.89 per cent from 5.45 per cent in the previous year, reflecting the pressure on the bank's core lending business.

MOFSL has upped its EPS estimates for RBL Bank by 12 per cent each for FY26/FY27, as business growth is gaining traction and slippages are expected to normalise by Q2FY26.

"We also estimate the C/I ratio to improve to 61 per cent by FY27. We estimate FY26E RoA/RoE at 1.2 per cent/12.8 per cent. We upgrade RBL Bank from 'Neutral' to 'Buy' with a target of Rs 220 (premised on 0.8x FY27E ABV)," MOFSL stated.