Morgan Stanley maintains underweight on RBL Bank, target price Rs 240

Morgan Stanley has maintained underweight rating on RBL Bank in the long term with a target price of Rs 240. Shares of RBL Bank ended down 4.2% at Rs 320.75 on Tuesday while BSE Sensex closed 247.55 points down at 40,239.88.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated interest income of Rs 1784.52 crore, up 6.28% from last quarter interest income of Rs 1679.01 crore and up 52.09% from last year same quarter interest income of Rs 1173.37 crore. The bank has reported net profit after tax of Rs 53.42 crore in the latest quarter.


Investment Rationale

Although recent capital-raising is a positive, the brokerage is underweight on the stock due to uncertain asset quality outlook. India's macro outlook remains difficult given muted economic growth, said Morgan Stanley. This, amid RBL's high exposure of to BBB and below rated corporates, implies high risk of continued elevated slippages, the brokerage said.