RBL Bank delivered healthy set of numbers for Q4FY2019, with PAT growth of 39% yoy. On the operating front, the bank reported 48% yoy growth in NII. The NIM qoq/yoy increased by 11/25 bps, respectively, driven by a higher yield on advances. The bank managed to reduce its expenses and brought down the cost/income ratio from 52.8% in Q4FY2018 to 51.2% in Q4FY2019.

Outlook & Valuation: We expect RBL Bank to grow its advances at CAGR of 35% over FY2018-20E. Improvement in CASA, higher share of retail book and in-house priority sector lending will support NIM going forward. At CMP, RBL trades at 2.9x FY21E P/ABV, which we believe is attractive considering growth prospects, hence, we recommend BUY with a target price of `775 over the next 12 months.

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