Buy RBL Bank, target price Rs 125: Emkay Global

Emkay Global has buy call on RBL Bank with a target price of Rs 125. The current market price of RBL Bank Ltd. is Rs 101.1. Time period given by analyst is one year when RBL Bank price can reach defined target.

RBL Bank Ltd., incorporated in the year 1943, is a banking company (having a market cap of Rs 6046.11 Crore).

RBL Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2021.



Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 2816.52 Crore, up 3.79 % from last quarter Total Income of Rs 2713.65 Crore and up .43 % from last year same quarter Total Income of Rs 2804.57 Crore. The bank reported net profit after tax of Rs 208.66 Crore in latest quarter.

Investment Rationale
The brokerage believes the current dismal valuations (0.4x FY24 ABV) largely ignore the new management’s strategy that focuses on sustainable growth/returns now and be more regulatory-compliant v/s the previous high-risk/high-return strategy that partly led to regulatory intervention. It also takes comfort from bank’s higher capital level (Tier I -16%). Thus, it recommends Buy on RBL Bank, for investors who are ready to see through the near-term transitional pain for reaping gains in the long term. Key risks: High level of management attrition disrupting the growth/asset-quality improvement story; break-up of card tie-up with BAF

Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of 30-Jun-2022, while FIIs owned 28.5 per cent, DIIs 11.63 per cent.