Share of private lender RBL Bank erased early gains after the company published its quarterly earnings for the July-Sept period.
The lender's net profit grew 165% YoY during the September quarter to Rs 144 crore on steady interest income and lower cost of deposits. The bank had posted a profit of Rs 141 crore in June quarter, and Rs 54 crore during the year-earlier quarter.
Following the Q2 earnings update, shares of RBL Bank opened 3.5% higher to hit an intraday high of Rs 181.9. RBL bank shares erased early gains and touched an intraday low of Rs 171.2, falling 2.53% against the last close of Rs 175.65 on BSE. Currently, RBL Bank share price is trading at Rs 173.90, falling Rs 1.75 or 1% apiece on BSE.
RBL Bank is trading lower than 5, 20, 50, 100 and 200-day moving averages. The mid-cap stock has lost 4% in one week and 49% year-to-date. Market capitalisation of the bank stood at Rs 8,854 crore.
Company's operating profit grew 12% YoY to Rs 720 crore, while its total revenues grew 6% YoY to Rs 1,388 crore.
Commenting on Q2 earnings, Vishwavir Ahuja, MD & CEO, RBL Bank, said: "We are seeing growth revival especially in our retail businesses and being well positioned on capital and liquidity we are growing in our chosen segments. As a Bank, we have again achieved a robust set of numbers in this quarter and prudently added to our provisioning buffers. Despite the positive signals, we continue to focus on balance sheet protection, risk mitigation and capital conservation in the near term."
Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking said," RBL Bank reported a moderate set of numbers. Positive is CASA improved, BBB & Below book declined, and NII and Advance growth weak. Advance declined 4% YoY, The corporate loans declined by 26% YoY ( 43% of overall loans) but retail loans improved by 23% YoY. NII grew at 7%, which is a very weak growth considering the history of NII growth. NIMs declined 50bps to 4.34% due to accelerated de-recognition of interest on expected slippages in 3QFY21. Pre provision increased 13% led by controlled opex (declined 1% YoY). Deposits momentum carried over from 1QFY21 and grew 5% QoQ and CASA ratio improved to 31%. Bank expects credit cost similar to FY20 and it has a contingent provision of 1.2% of the loan book.
"We have a positive view on RBL bank considering inexpensive valuation", he added later.
LKP Securities said in its note," RBL Bank holds a healthy positioning in the fight against COVID demonstrated by 1) adequate COVID provisioning, 2) improved PCR, and 3) healthy liquidity position with LCR of 171%. Furthermore, a healthy capital position (CET 1: 17.4%) post fundraise would provide a cushion. Thus, we recommend a BUY rating on the bank with a target price of Rs 198 (based on 0.85xFY22 Price to Adjusted Book Value)."
Meanwhile, brokerage Motilal Oswal has also given a buy rating to RBL Bank with a target price of Rs 220. The brokerage expects loan growth to remain weak as the bank remains cautious in wholesale lending while expecting improving trends in the MFI/Credit card portfolio. The near-term higher focus is on garnering deposits and improving collections.
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