Check what CLSA, Morgan Stanley, Credit Suisse have to say on RBL Bank’s weak Q4 performance

Amid weak performance in fourth-quarter earnings of RBL Bank, many brokerage firms have maintained a mixed stance of Buy/Underperform for the private sector lender RBL Bank. The bank’s profit declined by around 34 per cent to Rs 75 crore in the March-ended quarter of the financial year 2020-2021. 

RBL reported low profit as provisioning on credit cards and micro-financing institutions increased in the quarter. The bank’ profit in March-ended quarter of FY20 stood at Rs 114 crore. 

CLSA maintains Buy on the stock due to undemanding valuations, however, it cut PAT estimates by 6-14 per cent with lower growth and increase in the provisions. The brokerage firm has also revised its target for RBL from Rs 315 to 245 apiece amid the near-term uncertainty remains high of the bank. 

Similarly, CITI lowers FY22/23 net profit estimate for RBL Bank by 16/14 per cent respectively as it builds in lower net interest margin and higher credit costs. The brokerage firm to have revised its target from Rs 300 to 250 per share as credit costs are likely to remain elevated in the second half of FY22 due to residual provisions on MFI and due to credit card slippages. 

On the contrary, as quarter four comes with continued weak asset quality for RBL Bank, Morgan Stanley maintains an Underweight rating on the stock. The brokerage firm sees further challenges given the second covid wave amid elevated stressed exposure. It sets a target of Rs 190 share price. 

As the RBL Bank’s slippages remain elevated and growth likely to lag larger peers, Credit Suisse maintains an Underperform stance on the stock. It also states that the bank has a potential impact from the second covid wave. The brokerage firm sets a target of Rs 180 per share. 

The RBL’s net profit for FY2020-21 increased marginally to Rs 508 crore from the year-ago Rs 506 crore. Whereas, its core net interest income was down 11 per cent during the reporting quarter at Rs 906 crore. The stock traded positive almost all day today, with a per cent rise at Rs 184 per share.