Emirates will invest $3 billion for a 60% stake in RBL Bank, triggering an open offer to acquire up to 26%. This will enable RBL Bank to scale up its operations and expand into cross-border and NR business. The deal, subject to regulatory and shareholder approvals, brings strategic capital and global synergy without changing senior management.
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Motilal Oswal Report
RBL Bank Ltd. reported a slight earnings miss due to higher provisions and lower other income even as margins expanded by 1bp QoQ. Business growth was steady, with advances growing 6.5% QoQ.
The bank is looking to grow unsecured business going forward as macro stress eases. Moreover, the comfortable credit-deposit ratio will further support credit growth. Gross non-performing asset ratio improved, whereas net non-performing asset ratio deteriorated.
Slippages moderated but remained at elevated levels. Emirates will invest $3 billion for a 60% stake in RBL Bank, triggering an open offer to acquire up to 26%. This will enable RBL Bank to scale up its operations and expand into cross-border and NR business.
The deal, subject to regulatory and shareholder approvals, brings strategic capital and global synergy without changing senior management.
Given the fund infusion from Emirates NBD expected in Q1 FY27, we increase our earnings estimates by 19%/17% for FY27/28E.
We estimate FY27/28E RoA of 1.2%/1.4%. Reiterate Buy with a target price of Rs 350 (premised on 1.3x FY27E book-value).
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