RBL Bank Ltd., incorporated in the year 1943, is a banking company (having a market cap of Rs 13452.45 Crore).
Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 2636.20 Crore, up .85 % from last quarter Total Income of Rs 2613.89 Crore and down -2.85 % from last year same quarter Total Income of Rs 2713.41 Crore. The bank reported net profit after tax of Rs 146.88 Crore in latest quarter.
Investment Rationale
RBL Bank management continues with its stance of reducing inherent business risk and lowering earnings volatility through: 1) consolidation of the wholesale banking portfolio, 2) cautious/selective approach in MSME/LAP, and 3) ramp-up of secured retail products (home loans). On a positive note, credit card sourcing and spends are showing signs of resurgence (key growth driver in the near term). On asset quality, credit cost stabilisation still seems some time away given: 1) stress in MSMEs and a few pockets of MFIs; 2) incremental stress recognition on credit card portfolio and known corporate accounts; and 3) inadequate contingency buffer. Bank will take some more quarters to normalise its earnings trajectory, delivering modest RoA/RoE in the interim. This will cap valuation rerating beyond 1x FY22E adjusted book. The brokerage maintains HOLD. Key risks: 1) credit card / wholesale businesses exhibiting better stability and quality; 2) premium deposit rate may weigh on NIMs.
Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of Dec 30, 2020, while FIIs held 35.2 per cent, DIIs 24.7 per cent and public and others 40.2 per cent.
