Bull vs Bear: Should you invest in RBL Bank? Zee Business analysis reveals this!

In today's edition of BULL Vs BEAR, Zee Business' Senior Research Analyst Varun Dubey and Research Analyst Ashish Chaturvedi bring exclusive research on the RBL Bank stocks. The research team brings the positives and negatives of this stock along with an expert take.

Arguing for the RBL Bank shares, Dubey said that RBL Bank shares are a good investment since there is no risk and only opportunities of good return. The company's management likewise stated the same thing. If we look at the December quarter, he claims it was considerably better. The numbers suggest that positivity is on the way. The company is also attempting to raise the ROA (Return on Asset) to 1% and has said that it will continue to be better.

Chaturvedi countered that this optimism is not reflected in the stock price. It has dropped from Rs 208-Rs 212 to Rs 130 in the last year, and the difference can be noticed in their performance. Deposits appear to be dropping in the third quarter, and the company's ROA is 0.61%.
Not only that, but the OPEX tax (operating expenditures) for expanding credit card clients appears to be rising, which might have an influence on the company's profits in the future, according to analyst Chaturvedi.

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To this, Dubey said, the company continues to grow in the credit card business, and the quality of asset management will also improve as banks like ICICI and RBL had benefited from when HDFC exited the market.

He further said since the lockdown is over, MSMEs need a lot of help, which the government is already providing and their recovery will also be visible.

To counter this, Chaturvedi stated that the economy would revive in the future, after which the company will establish branches for additional clients, resulting in an increase in the firm's expenditures. So along with OPEX, the firm will have to bear the expense of branch expansion, causing the margin to be affected consistently.

Meanwhile, Dubey stated that the company's issue was nonperforming assets (NPAs), which are improving. Recovery has begun in CCDs' nonperforming assets, as well as in other accounts.

Vijay Chopra suggested if you want to invest in banks then go for big banks like SBI, ICICI, HDFC, Kotak banks. He said that there has been a significant increase in competitiveness. Many online platforms, such as Amazon Pay and Paytm, have emerged to facilitate money transfers. There are also other loan-giving Apps. That indicates that the formality of going to the bank has passed.

He went on to say, I believe the banking business model will alter in the near future. Small banks face a greater risk. Only banks with substantial balance sheets, strong asset quality, stock-taking capability, and a broad reach will be able to survive.

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