NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
RBL Bank Ltd. reported large miss on profit after tax led by a rise in credit costs from higher delinquencies in micro finance/credit card portfolios, elevated interest reversals, and sequential de-growth in higher yielding books.
Ex of one-offs in Q1, net interest margin moderated by 35 basis points QoQ to 5% while credit costs stood at 3% in Q2 with slippage ratio at 4.7%. Additionally, Rs 2.5 billion of contingent provisions remain unutilized and will mostly be utilized once the bank is closer to the end of stress.
Management guides for credit costs of 2.6-3% in FY25E versus 2.1-2.2% earlier. While the pain in the cards portfolio, partly led by collection transition, is behind; delinquencies in the MFI book are yet to peak.
We downward revise FY25/26E earnings by 44%/5% post factoring in higher credit costs and lower growth assumptions.
Maintain ‘Accumulate' rating valuing the bank at 0.8 Sep-26E price to book value with revised target price of Rs 235 against return on assets/return on equity of 1.1%/11% for FY26E.
Trading at 0.9 times FY25E ABV, valuations are undemanding. But bottoming of asset quality pain remains key to higher multiples
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
