RBL Bank on Wednesday posted a 34.8 per cent rise in net profit at Rs 89.89 crore for the quarter ended September 30, despite increase in provisions for bad loans. The bank had reported a net profit of Rs 66.9 crore in the corresponding quarter of last fiscal. Being the first result by the bank post initial public offering (IPO), it was highly awaited by investor community. At 11.08 am, shares of the recently listed private sector lender were trading 5.52 per cent up at Rs 330 on Thursday. The scrip opened the day at Rs 321 and has touched a high and low of Rs 334.60 and Rs 317.15, respectively, in trade.
Post Q2 results, brokerage house Angel Broking maintained ‘Buy’ rating on RBL Bank shares with a target price of Rs 365. Below are 3 reasons why Angel Broking maintained ‘Buy’ rating on RBL Bank shares.
1) On the asset quality front the bank has delivered stable set of numbers, with slippages under control. Though absolute gross non-performing assets (GNPAs) went up to Rs 275 crore compared to Rs 253 crore in Q1FY17, as a per cent of loans it has come down to 1.10 per cent from 1.13 per cent. The brokerage house does not expect deterioration in the asset quality in the medium term.
2) At the current levels, the stock is valued at 2.5 times its FY18E ajusted book value and seems attractive given the growth opportunity it provides.
3) RBL Bank has met the expectations with a 44 per cent growth in loan and 38 per cent growth in deposits. While the reported PAT at Rs 89.89 crore was up by 34.30 per cent, adjusting for the one time hit the bottom-line would have been far better.